Compound Interest
Compound interest is interest calculated on both the original amount and the interest already added. The balance can grow faster than under simple interest, which is charged only on the original principal. Unpaid interest on a debt can compound the same way. A higher interest rate, or interest added more often, makes the balance grow faster. The Rule of 72 is a shortcut: divide 72 by the annual interest rate to estimate the years it takes the money to double.
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