Top Compound Interest Accounts
One of the secrets to becoming a good investor is having a solid understanding of how compounding works. Another one is to know the best services or digital products to use to grow your money. It does not matter whether you are a beginner investor or an experienced long-term investment platform user; the most important thing is to obtain the right knowledge and get started.
The most flexible and well-known types of accounts that you can open today to earn compound interest are high-yield savings accounts. Other similar types of accounts are certificates of deposit, money market accounts, discount brokerages, crypto savings accounts, interest-bearing checking accounts, Individual Retirement Accounts (IRAs), dividend stocks, and bonds.
In this comprehensive guide, we are offering you our collection of the best compound interest savings accounts to open if you want to earn higher-than-usual returns on your deposit. Continue reading to learn what a compound interest account means, identify the best providers of this type of account, and discover other interesting aspects of it.
Meaning of a Compound Interest Account
Simply put, a compound interest account is any type of account that continuously reinvests the interest you have earned into your current balance. In that way, you are earning money on your initial deposit and the previous interest that was yielded. The process is known as compounding.
When you open a savings account, depending on the terms, you can earn compound interest on a daily or monthly basis. The latter is the most common. Besides, there is no significant difference between daily and monthly compounding in most cases.
So, the best way to use a compound interest account is to make regular contributions to the balance. You will earn even greater interest on your deposit due to compounding.
Pros and Cons of Compound Interest Savings Accounts
When considering a compound interest savings account, here are the pros and cons you need to know:
Pros
- Easy deposit and withdrawal of funds at any time
- No or low minimum savings account balance requirement
- Higher introductory interest rates to encourage account creation
- Exponential increase in earnings through compound interest
Cons
- Some require having a minimum balance
- Adding regular contributions is a requirement to earn more rewards
Best Compound Interest Savings Accounts
Today, there are many apps you can use to grow your money through compounding. However, the best among them are the following:
SoFi
SoFi is a financial super app that provides FDIC-insured accounts. It enables users to perform a wide range of transactions, which include banking (savings), social trading, stock investment, loan application, cash-back credit card provision, and insurance.
Open a savings account with SoFi, and you will earn 3.75% APY (Annual Percentage Yield) on your deposit. This is 12 times the average interest rate on most savings accounts. In addition, you do not have to pay any account fees or maintain a minimum balance as you work towards achieving your savings goals through compounding. That is not all; depending on your direct deposit amount, you could get a cash bonus of up to US$250.
Go to SoFi now for your compound interest savings account!
Varo
Think of Varo when you need a bank and savings account that makes your money work for you in a stress-free way. This neobank has no monthly fees, minimum balance requirements, or credit checks. It works with third-party apps, such as Zelle, to enable fast and free sending and receiving of cash and offers up to 6% cashback on the use of its Varo Cards.
Varo also offers a high-yield savings account with an easy auto-saving feature and no fees so that its users can grow their money conveniently. Its APY ranges from 3% to 5%, compounding monthly.
Go to Varo now for your compound interest high-yield savings account!
Zopa
From simple and stress-free personal loans to flexible savings account pots, Zopa offers all that you need to manage your money without fear or worries. It is a multi-award-winning bank and savings platform provider in the United Kingdom that caters to a wide range of customers' needs through car loans, car hire purchases, credit cards, and fixed-term savings.
Zopa provides simple, reliable, and safe fixed-term compound savings account with an APR that varies between 3.92% and 4.26%, depending on the duration of the full term, which could be 1 year or up to 4 years.
One thing to note about the Zopa fixed-term savings account is that, as the name implies, you will not be able to access your balance until the end of the term.
Go to Zopa now for your compound interest fixed-term savings account!
Capital One
Capital One, the leading provider of the best variety of credit cards, is also a major player in the provision of compound interest savings accounts. Its high-yield savings account offers one of the most rewarding rates in all of America.
Capital One has an easy-to-open online 360 CD (certificate of deposit) that allows you to grow your money with a 4.1% APY. It requires no minimum balance, guarantees a fixed rate of return, and does not tie your CD’s performance to market risks. Also, the term of your CD, which can be from 6 months to 60 months, determines the APY and earnings you will receive.
Go to Capital One now for your compound interest certificate of deposit!
Bilderlings
Bilderlings is a single financial app and savings platform that individuals and businesses can use to manage online payments, SEPA transfers, and other cross-border transactions. It offers digital accounts, including high-interest savings accounts, and payment cards that offer cash back on purchases.
The savings accounts of the Bilderlings include two types of compound interest products. One is a term deposit, while the other is a savings account. Although the interest rate is not very high, 2.6%, the good part is that you can start saving for high rewards with just €100. The maturity terms are three, six, twelve, or twenty-four months with variable rates.
Go to Bilderlings now for your compound interest savings account!
Monzo
Monzo is a neobank and digital service provider that makes banking, opening savings accounts, and investing easy for all. It is a multiple award-winning single platform that provides excellent tools for being in charge of your money.
Monzo allows its users to create an instant Savings Pot that yields up to 3.55% gross fixed interest, or the Annual Equivalent Rate (AER), on money deposited for one year. However, keep in mind that the minimum deposit required to open this account is GBP 500 or its equivalent in EUR.
Go to Monzo now for your compound interest savings Fixed Pot!
Northmill
Residents of Sweden, Finland, and Norway have a Sweden-based neobank at their service called Northmill. It is one of the fastest-growing European fintech companies. The vision of the bank is to offer smart solutions to merchants and improve the personal finances of people through savings accounts, loans, credits, and insurance.
The savings account offered by Northmill will reward your deposit with 2.35% to 3% interest annually, which could be fixed or variable. In addition, you are not required to pay any fees, and your deposit is insured for up to SEK 1,050,000.
Go to Northmill now for your compound interest fixed or variable savings account!
Revolut
Revolut is a super app and neobank that offers innovative products for everything that has to do with money and its management. The financial solutions provided by this bank include online payments, currency exchange, international money transfers, cards, crypto, stocks, commodities, and digital savings vaults that enable its customers to grow their money daily (compounding).
Go to Revolut now for your compound interest savings vaults!
How to Make the Most of Your Compound Interest
Opening a high-yield compound interest savings account has the potential to help you significantly grow your money over time, especially if you are adding regular contributions to the balance. But how well you enjoy it depends on some other factors, which include whether you are avoiding personal money mistakes.
Furthermore, if your savings account requires a minimum balance monthly, you should maintain it to avoid being charged a fee. Better still, you should open a compound interest savings account with any of the digital services we have recommended above to avoid such fees.
Best High-yield Investment Apps
Aside from compound interest savings accounts, there are some high-yield investment platforms and apps that can help you grow your money over time. They serve as alternatives to compound interest savings accounts. Our top picks from the best on the market are listed below.
Nexo
Nexo is the right place to go when you need long-term investment solutions. It helps you grow your wealth in a secure environment through saving and investing in digital assets. You can use Nexo to grow your portfolio on the go thanks to its interest-earning opportunities.
With more than 60 different cryptocurrencies supported, interest-earning crypto accounts (4–12% in Nexo Staked Ethereum, NETH), and a reliable NFT lending platform, you are sure to get the best return for your investments on Nexo. Moreover, it offers daily payouts, flexible earnings, top-tier insurance, and zero fees.
Binance
Although the prices of cryptocurrencies fluctuate often, people still use different ways to make a living off of their crypto savings and investments. They use digital platforms like Binance. This Nexo competitor and provider of an alternative to compound interest savings accounts is a well-known crypto exchange, arguably the best in the world currently. Besides, it is one of a few online sites where you can earn up to 6% APR on your digital coin investments.
Wirex
Gain complete control of your cryptocurrencies and NFTs on Wirex! Aside from enabling you to earn up to 16% cryptoback on your transactions made with its cards, Wirex is the savings account alternative to choose when you need to grow your money without fees. It is the only provider of X-Accounts (customizable savings and investment accounts) that come with unbelievable interest rates, which are compounded daily.
FAQ
A compound interest account is a risky investment like every other high-reward opportunity. While you can expect to make exponential gains in return for your deposit due to compounding, bad market factors can lead to zero gains or, in the worst case, losses. In other words, interest rates might become unfavourable or your investment platform might go bankrupt like Celsius and others did in 2022.
The types of accounts that compound interest monthly are high-yield savings accounts, dividend stocks, real estate investment trusts, certificates of deposit, and bonds. Nevertheless, the providers of these accounts can also determine how frequently the compounding is done. So, check with your financial institution to know whether the account you want to open will be compounded daily, monthly, or annually.
Getting the highest compound interest rate depends on some factors, such as the type of account you are about to open, the term of the investment, and the amount deposited. However, for the highest compound interest on your savings, the following digital banks have the best accounts: Capital One, Varo, SoFi, Zopa, Bilderlings, Monzo, Northmill, and Revolut.
The types of accounts that compound interest daily are some high-yield savings accounts (such as the Revolut Savings Vaults), crypto lending accounts, money market accounts, and certificates of deposit (CDs).
The "Rule of 72" is a formula that helps to determine the number of years that will be required for the value of an investment to double based on a particular interest rate. It is used to produce an estimated investment return using daily or monthly compounding but without additional contributions.
Here is an example of how the Rule of 72 is used: Let us assume you want to know how long it will take for your investment balance to increase from US$10,000 to US$20,000 using a yearly return of 5% without adding any further contributions. Simply divide 72 by 5, and you will see that it will take 14.4 years.
Compound interest affects your savings account by increasing the balance exponentially. As each day or month passes, the interest you have earned will be added to the previous balance and then included in the calculation of your next interest. The process, which is known as compounding, continues until the end of the term or when you close the account.
The frequency at which bank accounts compound depends on the account. It could be daily, monthly, or yearly. There is no general rule for all banks to follow in the provision of compound interest savings accounts to their customers.
Yes, compound interest accounts are normally secure. However, it depends on the quality of your bank or financial service provider. If you use any of the best compound interest savings account providers we have listed in this post, you can rest assured that your account and transactions are secure to the highest international standard.
The Takeaways
Opening a compound interest savings account is the best way to earn the most rewards on your money deposits. That is because compounding and adding regular contributions help you grow your money exponentially over time.
It is time to start investing if you have never done so! Keep in mind that your money might compound more as you invest it over the long term. But if you already have a portfolio of investments, it might help to see how you can add compound interest savings accounts to it.
Having shown you the best compound interest savings accounts to open, we encourage you to try any of them and get first-hand experience with their impressive offerings. We are sure that you will be convinced to use them to invest more in savings, cryptocurrencies, NFTs, and other digital assets.
