Compound Interest Guide
Compound Interest Glossary
A simple glossary of common compound interest terms used in savings and investment calculators.
This article is for educational purposes only. It does not provide financial, investment, tax, or legal advice. Read the full Financial Disclaimer.
In this guide
Principal, rate, and time Contribution and compounding frequency Future value and interest earnedPrincipal, rate, and time
Principal means the starting amount. Rate means the annual percentage used in the estimate. Time means how long the money is allowed to grow.
These three terms appear in almost every compound interest explanation.
Contribution and compounding frequency
A contribution is money added after the starting amount. Compounding frequency describes how often interest is added to the balance.
Monthly, quarterly, annual, and daily compounding are common examples.
Future value and interest earned
Future value is the estimated ending balance. Interest earned is the portion of the ending balance that comes from growth rather than deposits.
Understanding these terms makes calculator results much easier to read.