# Guide to Compound Interest

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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.

## What Is Compound Interest?

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## How Does Compound Interest Work?

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*What is the Average Interest on A Savings Account?*## Types of Compound Interest

**Annual compounding**Interest is calculated and paid once a year.**Quarterly compounding**Interest is calculated and paid once every three months.**Monthly compounding**Interest is calculated and paid each month.**Daily compounding**Interest is calculated and paid every day.

## Types of Accounts That Typically Use Compound Interest

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## Calculating Compound Interest

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## Example of Compound Interest

## Advantages and Disadvantages of Compound Interest

Pros of Compound Interest | Cons of Compound Interest |

## The Takeaway

*Lantern can help you compare online savings accounts and find today’s best rate.*

### Frequently Asked Questions

### About the Author

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