Think of compound interest like a snowball rolling down a hill, accumulating more mass (interest) on top of the layers it has already gathered with each passing year.

Compound interest incorporates 'interest on interest' by adding previous period interest to the principal base. The total amount after $n$ years is computed using the formula $A = P \times \left(1 + \frac{R}{100}\right)^n$, after which the compound interest is found via $CI = A - P$.

Always verify whether interest is compounded annually, half-yearly, or quarterly, as it changes the compounding frequency and effective rate.