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### Course: Algebra 2 (FL B.E.S.T.)>Unit 9

Lesson 8: Compound interest

# Intro to compound interest

Let's understand how compound interest is different from simple interest. Let's also see how compound interest is simply a special case of percentage increase. Created by Aanand Srinivas.

## Want to join the conversation?

• Why does the bank not apply compound interest?
• It actually does apply compound interest. So if you take a loan it will keep on getting compounded either annually or half yearly. Same for a deposit
• I had a weird homework question where I was allowed to use a calculator and I eventually solved it, but I didn't understand. Sally had a credit card with \$5,500 and 17% compounded annually. She wanted to pay off a loan within 5 years, and they wanted us to find the interest she paid off. I am unaware of where the loan comes in or why the answer is \$6558.46. Could someone explain?
• Sorry for being five months late, but the answer is that the formula for compound interest calculates the total amount not interest, so you have to subtract the principal from the amount.
(1 vote)
• love this guy, nice vid
(1 vote)
• How do you know how to do compound interast
(1 vote)
• Why does the bank not apply compound interest?
(1 vote)
• They usually do actually(irl)
(1 vote)
• Tbh, the way it’s described to do the problem is a little confusing. Can anyone “sum it up”?
(1 vote)