Compound Interest

(redirected from Compounding of interest)
Also found in: Dictionary, Thesaurus, Legal, Financial.

Compound Interest

 

interest computed not only on an original sum but also on the interest accruing to the original sum over a preceding period.

References in periodicals archive ?
(16) Assuming the short-term AFR at 6%, the semiannual compounding of interest for a full semiannual period is calculated by multiplying the loan balance at the beginning of the period by 3% (.06/2).
When the interest rate was determined every two years (as it was before enactment of the Economic Recovery Tax Act of 1981), the spread between the section 6621 rate and the market rate may have become substantial and therefore arguably encouraged taxpayer "gaming." With the changes adopted in 1981 and 1982 (requiring frequent adjustments of the rate and the daily compounding of interest), however, the potential for any significant differential was eliminated.
For example, the extra taxes from rising tax rates may be offset by a larger amount of accumulated funds in an IRA due to tax-deferred compounding of interest at a higher rate of return.
The only growth in bond portfolios came from the compounding of interest payments.
The compounding of interest which is bi-annual in the case of 10 year National Savings Certificate (discontinued since 20.12.2015), 5 year National Savings Certificate and Kisan Vikas Patra, shall be done on an annual basis from 1.4.2016.