Compound Interest Explained
You might have heard that X-Accounts earn compound interest. But what exactly does that mean? Let’s have a look at what compound interest is and how you can get your hands on it.*
What is compound interest?
Simply put, compound interest is interest on interest. Thought to have originated in 17th-century Italy, the idea is to earn interest on both the money you’ve saved and the interest you’ve earned on that money.
Unlike simple interest (which is calculated only on the amount saved, or the ‘principal’), which does not accrue, compound interest builds exponentially over time.
How does compound interest work?
When interest is compounded, the regular amount of interest you earn on your balance is reinvested, earning you even more interest. So, in a savings account, it allows you to grow your balance faster than you would be able to otherwise.
Let’s take a look at an example.
If you have $1,000 and are offered a simple interest rate of 1% by a bank, you’d have $1,010 after one year.
If that interest was compounded daily, however, you’d get an extra 1/365 of that 1% every day of the year. So, you’d end up with $1,010.05.
Keep this up for a decade, and you’ll have earned $100 in free money. And, of course, the higher your rate, the more you’ll earn.
How can you earn compound interest?
X-Accounts is our game-changing feature that allows you to earn unprecedented levels of passive income, just for depositing your funds. You can deposit multiple traditional and cryptocurrencies at any point, earning up to 16% APR that can be withdrawn any time, with interest compounded daily and paid weekly. And with X-Accounts Plus, you also have the option to deposit your funds for 30 days to earn higher interest rates!
Your earnings are calculated daily and paid weekly. But the longer you leave your money in, the more interest you’ll earn on it.
Need to withdraw your funds?
No problem. X-Accounts are all about flexibility - we don’t do minimum amounts or fixed terms. And we don’t charge fees for account set-up, maintenance or withdrawals, either.
Open up X-Accounts for currencies of your choice in the Wirex app today and see what they can do for you.