Word of the Week: Compound Interest

Definition: Compound interest is when you earn interest on both the money you've saved and the interest you earn. 

Example: If you put $1,000 in the bank, and the bank pays you a little bit in return, such as 2% per year. At the end of the year, you've earned $20.

Key Takeaway: Compound interest is when you earn interest on interest (or pay interest on interest).

Challenge: Find out what your Annual Percentage Yield (APY) is for your savings account.

Fun Fact: Compound interest was invented in ancient Babylon around 2000 B.C., which is around the same time the wheel was invented.