What can compound interest help to increase?

Compound interest can significantly increase the total amount saved over time by allowing interest to be calculated not only on the initial principal but also on the accumulated interest from previous periods. This process creates a compounding effect where the investment grows at an accelerating rate, making it possible to accumulate wealth more effectively than simple interest would.

As the interest compounds, the savings grow exponentially over time, especially when investments or savings are left to accumulate for longer periods. This is why starting to save early and allowing funds to grow with compound interest can be highly beneficial in building a substantial financial reserve. The other options do not capture the essence of how compound interest functions; rather, they relate to costs or expenses that do not benefit from compounding in the same way savings do.