How interest is calculated can have a great impact on the interest earned by your account and how your savings grow. Compound interest arises when interest is added to the principal and when the interest that has been added also earns interest. You'll see your account balance grow more quickly with accounts that pay interest more frequently. The "Annual Percentage Yield" or APY is the effective annual rate of return once the effect of compounding interest is factored in.
Wellness category
Wellness category
The Benefits of Compounding
Information presented in the Northwest Financial Wellness Center is provided for educational purposes only and is not related to actual Northwest products or services. Northwest makes no representations as to the accuracy, completeness or specific suitability of any information presented. Information provided should not be relied on or interpreted as accounting, financial planning, investment, legal or tax advice. Northwest recommends you consult a professional for any specific guidance you are seeking.