You don’t have to be a financial expert to understand how compound interest works. Compound interest allows you to earn interest on interest earnings as well as your principal at the end of each compounding period.
Keep reading to learn how including savings tools with compound interest can benefit your savings plan.
Understanding how compound interest works can motivate even the most reluctant savers to put money into accounts with compound interest. It’s actually quite simple—the interest you earn on your principal is added to the principal.
During the next compounding period, you will earn interest on the original principal plus the earnings, thus increasing your overall earnings. As your principal grows with additional interest earnings, so do subsequent earnings for an ever increasing return on your money.
The more frequently interest is compounded, the faster your principal grows and the more money you can earn from your original deposit.
You can calculate how much an initial deposit earns with compound interest by using this compound interest calculator. This tool allows you to enter the following:
Even a small amount of money can generate a substantial sum over time. Opening a savings instrument with compound interest when you are young can help build a healthy savings balance from a modest initial deposit. The key is to start saving early and to make regular contributions.
Now that you are familiar with how compound interest works, think about opening a savings account today. Synchrony Bank offers a range of deposit products that allows you to earn competitive returns.
Visit us online to open an account or call 844-345-5789 to speak with one of our banking representatives.
The Calculator Site: thecalculatorsite.com/articles/finance/compound-interest-formula.php
*ANNUAL PERCENTAGE YIELD (APY): All APYs are accurate as of 06/21/2018.
APYs are subject to change at any time without notice. Offers apply to personal accounts only. Fees may reduce earnings. For Money Market and High Yield Savings Accounts, the rate may change after the account is opened. For CDs, a minimum of $2,000 is required to open a CD and must be deposited in a single transaction. A penalty may be imposed for early withdrawals. After maturity, if you choose to roll over your CD, you will earn the base rate of interest in effect at that time. The APY shown for CDs and IRA CDs is for a 60-month CD with a balance of at least $25,000. Click here for all CD rates and terms offered.