What Types of Accounts Make Compound Interest?
A great mortgage broker will be well versed in the various types of accounts that make compound interest in order to successfully assist their clients through any questions or concerns that may arise over compound interest. There are countless types of accounts that have the potential to make compound interest, including the following examples:
- Bond funds and bonds
- Money market accounts
- Various types of savings accounts
- Dividend stocks
- Real estate investment trusts
- Certificates of deposit (CDs)
Compound interest can be described as the interest that an account holder earns through placing an initial deposit and receiving a return that multiplies over the years depending on the interest rate.
Certificates of deposit (CDs) are low-risk investment opportunities that allow a client to begin increasing their funds. Certificates of deposit are generally offered by banks, require a minimum deposit, and pay at a higher interest rate than traditional savings accounts. CDs will pay the compound interest a client has accumulated consistently.
Money market accounts are similar to various savings accounts because they are interest-bearing. Money market accounts will generally have higher interest rates than traditional savings accounts and can allow a client access to their accumulated funds through debit cards and check writing.
One type of savings account that makes compound interest is a high-yield savings account. High-yield savings accounts generally do not require a minimum initial deposit and are known to pay higher interest rates than traditional savings accounts.