HOW INTEREST ACCUMULATION WORKS FOR OR AGAINST YOU

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The following tables are meant to show how compound interest accumulates in two different scenarios. The first table gives an idea how quickly credit card debt can explode if not tended to in time. It illustrates the growth in value of one dollar over yearly periods (vertical ) for given amounts of interest (horizontal ). For credit cards with higher interest rates, for example, the rate of growth can be seen to be quite impressive. This is meant to illustrate the danger of poor credit card account management. Most people lose site of the fact that interest is compounded ! This makes a significant difference.

Conversely, the second table shows how one dollar invested each year generates compound interest and accrues value over time (vertical ) and for particular interest rates ( horizontal).

Note that the difference in the two tables is that the first (Debt Table) involves a single dollar and it's growth while the second (Investment Table) involves the addition of a dollar to the principal every year:

DEBT TABLE

Growth of One Dollar in Debt Yearly for Varying interest Rates

YEAR	1%	5%	10%	12%	15%
1	1.01	1.05	1.10	1.12	1.15
2	1.02	1.10	1.21	1.25	1.32
3	1.03	1.16	1.33	1.41	1.52
4	1.04	1.22	1.46	1.57	1.75
5	1.05	1.28	1.61	1.76	2.01
6	1.06	1.34	1.77	1.97	2.31
7	1.07	1.41	1.95	2.21	2.66
8	1.08	1.48	2.14	2.48	3.06
9	1.09	1.55	2.36	2.77	3.52
10	1.10	1.63	2.59	3.11	4.05
11	1.12	1.71	2.85	3.48	4.65
12	1.13	1.80	3.14	3.90	5.35
13	1.14	1.89	3.45	4.36	6.15
14	1.15	1.98	3.80	4.89	7.08
15	1.16	2.08	4.18	5.47	8.14

INVESTMENT TABLE

Growth of One Dollar Invested Each Year for Varying interest Rates

Year	1%	5%	10%	12%	15%
1	1.00	1.00	1.00	1.00	1.00
2	2.01	2.05	2.10	2.12	2.15
3	3.03	3.15	3.31	3.37	3.47
4	4.06	4.31	4.64	4.78	4.99
5	5.10	5.53	6.11	6.35	6.74
6	6.15	6.80	7.72	8.12	8.75
7	7.21	8.14	9.49	10.09	11.07
8	8.29	9.55	11.44	12.30	13.73
9	9.37	11.03	13.58	14.78	16.79
10	10.46	12.58	15.94	17.55	20.30
11	11.57	14.21	18.53	20.65	24.35
12	12.68	15.92	21.38	24.13	29.00
13	13.81	17.71	24.52	28.03	34.35
14	14.95	19.60	27.98	32.39	40.50
15	16.10	21.58	31.77	37.28	47.58

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