Accounts That Earn Compounding Interest

Compound interest has been called the eighth wonder of the world.

By Adam Levy – Updated Sep 30, 2025 at 10:01 AM | Fact-checked by Margo Winton Parodi

Key Points

Compound interest grows your investment as earnings are reinvested to earn additional interest.
Investing early in compound interest accounts like savings or CDs maximizes wealth over time.
Diversifying investments with accounts offering compound interest can secure and increase returns.

Compound interest is undoubtedly the most important concept to understand when building wealth for the long term. If you put your money into an account that earns compound interest, you'll see your wealth grow exponentially. Here's a closer look at how compound interest accounts work.

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Compound Interest

Compound interest is what you get when you reinvest your earnings, which then also earn interest.

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An example of how interest compounds on a $1,000 investment growing at 10% annually. — Image source: The Motley Fool.

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Interest Rate

An interest rate is the cost of borrowing money or the premium you get for lending money. Learn how interest rates affect the economy.

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Savings Account

A savings account is an account that earns interest with a financial institution.

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FOMC (Federal Open Market Committee)

The Federal Open Market Committee (FOMC) is an arm of the Federal Reserve Board and is responsible for the direction of monetary policy through the open market operations of the Fed.

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What is the Difference Between Simple & Compound Interest?

One's good for borrowers; the other's good for investors.

How to Calculate the Interest Rate From an Income Statement

Here's how to determine how much a company pays to borrow money.

How to Calculate Interest Rate From Account Balance and Interest Paid

Calculating the annual interest rate for your investments can help you assess their performance.

How to Calculate Compounding on a Lump Sum at a Given Interest Rate

Understanding compound interest will help you better plan for your investment goals.

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About the Author

Adam Levy is a contributing Motley Fool stock market analyst covering technology, consumer, and financial stocks and how policy, economic, and consumer trends shape personal finance, Social Security and retirement savings. Before The Motley Fool, Adam was a financial advisor at Edward Jones. He studied finance and electrical engineering at Carnegie Mellon University.

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