Compounding Can Work For You Or Against You
Compounding is where the positive or negative return is dependent upon both the starting amount, or principle, as well as the return. Compounding works in your favor for positive returns in savings and investment accounts. Here the amount received is dependent on the total value of the account - including previous returns - and creates a positive growth function. Compounding works against you for credit cards where the amount you owe is dependent upon the total debt of the