Compound Interest

Compound Interest

Do you have a lot of cash stuffed under your mattress? Maybe there's just a jar of quarters sitting on your shelf. Either way, that extra money you've got sitting around could be doing something constructive, like making more money.

This is what compound interest is all about--the money you have earns interest, and then the interest earns interest, and so on.

All it takes is a trip to the bank. There you will find several ways that the principle of compound interest can make you more money.

SAVINGS ACCOUNTS

Getting a savings account is the easiest way to start saving. If you are under 18, most banks will let you start a savings account with any amount of money. If you are 18 or older, you will most likely have to maintain a minimum balance. Savings accounts are a good place to start, because you can access your money at any time. However, they do not earn as much interest as other accounts do.

CDs

If you have a certain amount of money that you won't need for a few months, consider putting it into a certificate of deposit, commonly known as a CD. When you put money in a CD, you are obligated to leave it there for a set amount of time. CDs are great because they earn more interest than regular savings accounts.

Banks and other savings institutions post the APY (Annual Percentage Yield), of their savings instruments. Check it out and start earning a little more on your savings.