The interest calculated on the primary principal and also on the accumulated interest of previous periods of a deposit or loan is called Compound Interest. In much simpler terms, Compound interest is the “interest on interest”. This interest usually makes a deposit or loan grow at a faster rate when compared with simple interest.

The amount of interest computed on an account such as a savings account or a checking account on a monthly basis or daily basis is known as the compound interest. A Certain amount is added to the principal amount, the money added on this basis is known as the interest amount.