Compound Interest

Compound interest is useful while saving money. The interest rate that is given to you at the time of your savings deposit accumulates over the time your money is in savings. When you remove your money from savings the interest rate collected is then profit. For example say you deposited $10,000 with 10% interest per year. After five years your savings is now worth $15,000. That is a 50% profit from your original deposit, not to bad. However, 10% is a pretty generous interest rate usually they are much lower causing less of a profit. Compound interest encourages people to save their money with banks or investments by providing them with an incentive, accumulating compound interest and making some extra money!