Compound interest is the interest on savings calculated on both the initial principal and the accumulated interest from previous periods.
“Interest on interest,” or the power of compound interest, is believed to have originated in 17th-century Italy. It will make a sum grow faster than simple interest, which is calculated only on the principal amount.
Compounding multiplies money at an accelerated rate and the greater the number of compounding periods, the greater the compound interest will be.
