Compound interest is interest added to the principal of a deposit or loan so that the added interest also earns interest from then on. This addition of interest to the principal is called compounding.
Sounds pretty nice, right? Here’s an example: in a bank account that has its interest compounded every year, an account with $1,000 initial principal and 20% interest per year would have a balance of $1,200 at the end of the first year, $1,440 at the end of the second year, $1,728 at the end of the third year, and so on.
The truth is, there’s some good news and bad news….
Compound interest can work for you, as in the case of an investment, or against you, in the case of a debt, with equally profound results.
Essentially, compound interest grows not only on any balance you have, but also on the interest earned. It’s interest paid on interest! Good for YOU when it is an investment, good for the BANKER when it is a debt.
Because you really, really want that magical power of compound interest working FOR you and NOT against you, as soon as you possibly can, we created this Payoff Accelerator to help you get any debts paid off as quickly as possible…
The Payoff Accelerator can dramatically show you what you can expect to save by making some minor adjustments to your repayment choices. Here are a couple of screen shots to illustrate this point.
Total Credit Card Debt
Look what happens when you pay just $200 extra each month.
The credit cards payoff in just 47 months!! And saves YOU over $7500 in Interest Expense!
Click on the Payoff Accelerator below to see how much total interest you will pay based on how quickly you pay off each of your credit cards.