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What Is Compound Interest and Why It Matters

Make Your Money Work for You

Want to grow your savings without working harder? That’s the power of compound interest. Whether building a rainy-day fund or saving for long-term goals, compound interest is one of the most innovative tools to help your money grow with minimal effort.

What Is Compound Interest?

Compound interest is interest earned on your original deposit (also called the principal) and the interest accumulating over time. It’s a snowball effect: as your account earns interest, that interest is added to your balance, so the next time interest is calculated, you earn even more.

In short, the more time your money has to grow, the faster it grows.

Compound Interest in Action

Let’s say you deposit $10,000 in a high-yield savings account earning 3.75% APY, and you don’t touch it:

  • After 1 year: You’d have approximately $10,375
  • After 5 years: You’d have approximately $12,028
  • After 10 years: You’d have approximately $14,378

That’s with no additional deposits. Just by letting your money sit and grow, you could earn over $4,000 in interest in ten years.

How to Make Compound Interest Work for You

  • Start Early – The sooner you start saving, the more time compound interest has to grow your money.
  • Choose High-Yield Accounts – Look for accounts that offer competitive rates, like PDCU’s High-Yield Money Market Accounts or Certificates of Deposit (CDs).
  • Leave It Alone – Let your interest compound by minimizing withdrawals. The more you leave untouched, the more you earn.
  • Contribute Consistently – Even small, regular deposits can lead to big growth over time.

Where to Grow Your Money at PDCU

People Driven Credit Union offers savings products that take full advantage of compound interest:

Ready to Grow?

Compound interest is one of the most powerful financial tools at your disposal. The earlier you start—and the smarter you save—the more your money can do for you.

Let’s build your savings strategy together:
Contact the People Driven Credit Union team or stop by a branch today to learn more about our high-yield savings options.

Your future self will thank you.



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