If you struggle to think that investing is worth it—especially if you don’t earn a lot of money—the concept of debt might actually help you view investing with renewed hope. That’s because the power of compound interest is the same whether you’re in debt or whether you’re investing.
The compound interest you earn from investing is the inverse of the compound interest you owe on a debt—if you understand how compound interest works when you’re in debt, you also can understand the power of compound interest when you invest.
Credit card debt = bad compound interest
If you’ve ever had credit card debt or other debt that accrues interest, you know how hard it can be to get out of debt. It can be so disheartening to see the money you owe continue to climb because of the interest you accrue.
The interest you accrue on your debt is one form of compound interest—in the case of credit card debt, this compound interest that drives you further into debt.
Compound interest is the reason why paying off your credit card debt as soon as possible is so important: The longer you take to pay off your debt, the more money you owe because of compound interest. Here’s an example to see compound interest in action:
If you have $6,371 in credit card debt—the average amount of debt in the US as of 2025—and you have a 23% APR (interest) rate, here’s how the time it takes you to pay off your debt influences the amount of compound interest you owe:
- If you pay off your debt in 18 months, you will pay $1,227 in interest, bringing your total debt to $7,598.
- If you pay off your debt in 36 months, you will pay $2,472 in interest, bringing your total debt to $10,814.
- If you pay off your debt in 12 months, you will pay $796 in interest, bringing your total debt to $7,167.
- If you pay off your debt in .6 months, you will pay $434 in interest, bringing your total debt to $6,805
This element of time is crucial to build compound interest—whether that’s the bad compound interest from credit card debt or whether that’s the good compound interest from investing.
The longer it takes you to pay off your debt, the deeper you go into debt. The longer your money is invested, the more compound interest you could earn and the more your wealth could grow.
Just as compound interest can keep you under a mountain of debt, compound interest can also help you build true financial freedom.
Investing = good compound interest
Let’s take a look at an example of how the length of time your money is invested influences how much money you could have—let’s see what happens if you have $6,371 to invest instead of being $6,371 in debt.
First we’ll take a look at a scenario where you get a somewhat conservative 8% rate of return; then, we’ll look at the same scenario where you get a more ambitious 10% rate of return.
If you invest $6,371 and you get an 8% rate of return (interest rate), that original balance of $6,371 could grow to $31,388 after 20 years—and that’s without considering any additional monthly contributions.
But if you invest $6,371 at age 20, that amount could grow to $154,645.74 by the time you turn 60 if you get an 8% rate of return—again, that’s without considering any additional contributions.
In both scenarios, you’re investing the same amount of money—$6,371. The only thing that changes here is the amount of time that your money is invested. In the second scenario, you could gain $123,257 just because your money is invested longer.
Now let’s look at the same set of scenarios except this time, you get a 10% rate of return instead of an 8% rate of return:
If you average a 10% rate of return, and your money is invested for 20 years, that original amount of $6,371 could grow to $46,687 after 20 years.
But if your money is invested for 40 years with that same rate of return, that original $6,371 could even grow to an astounding $342,126 by the end of that time period. Again, that’s without even factoring in additional contributions.
Compound interest is what makes investing worthwhile.
If you struggle to believe that investing is worth it, it’s probably because you didn’t understand just how powerful compound interest is when it comes to building wealth. But if you’ve ever been in debt, you already know how powerful compound interest can be—you just have to apply that same knowledge to investing.
Compound interest can either be your greatest burden or your greatest asset: The same thing that keeps you in debt longer could also help you build long-term wealth and financial independence. How you harness the power of compound interest is up to you.