Anatocism

Anatocism, ^* civil law. Usury, which consists in taking interest on interest, or receiving compound interest. This is forbidden. Code, lib. 4, t. 32, 1, 30; 1 Postlethwaite's Dict.

2. Courts of equity have considered contracts for compounding interest illegal, and within the statute of usury. Cas. t. Talbot, 40; et vide Com. Rep. 349; Mass. 247; 1 Ch. Cas. 129; 2 Ch. Cas. 35. And contra, 1 Vern. 190. But when the interest has once accrued, and a balance has been settled between the parties, they may lawfully agree to turn such interest into principal, so as to carry interest in futuro. Com. on Usury, ch. 2, s. 14, p. 146 et eq.

^* From Bouvier's Law Dictionary, 1856 Edition. Please see Bouvier's Legal Abbreviations & Abbreviated References for help with obscure nomenclature & references.