What is the difference between regular interest and compounded interest?
Regular interest is commonly referred to as the rate of interest. This is the amount of interest that is paid to you in quarterly installments, when CDF makes an interest payment. Compounded interest is often referred to as the yield. As interest is added to your investment each quarter, that money, in addition to your existing principal, begins to earn interest, too. The interest earned on your original principal and the interest you have previously earned combines to make the yield, or compounded rate of interest. Over the course of one year the amount of additional interest earned by leaving all of your interest earnings in your investment add together to make the annual yield.
