Juanita, who lives with her brother, has saved $12,000 for a down payment on her own house. Her financial planner suggests she look for a savings account that offers compound interest accounts. Why should Juanita take this advice?

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Summer Briggs

15 December, 23:43

Juanita, who lives with her brother, has saved $12,000 for a down payment on her own house. Her financial planner suggests she look for a savings account that offers compound interest accounts. Why should Juanita take this advice?

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Mason Esparza · Answer 1

Answer: She would get higher interest on her deposit.

Explanation: A compound interest account gives interest on savings of deposit after each compounding period (which could be monthly or yearly). This interest on the deposit amount increases as the deposit increases each compounding period.

Juanita's savings would yield fast increase in a savings account that enables compound interest.