Compound Interest Calculator

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Calculate Compound Interest online of your savings with an easy to use Online Compound Interest Calculator. Users just need to enter some basic details to online calculate compound interest. Know more details about compound interest by calculate compound interest monthly.

Some of the calculators that an individual may require are EMI calculator, amortization calculator, currency calculator, etc. Basically, each and every calculator has its own significance, as each one of them can be used to calculate the monthly amount to be paid on a product, or the loans to be paid periodically, or the exchange value of the currency of the country when you are planning to travel abroad and so on.

What is Compound Interest?

Compound interest is basically a concept of adding the ‘accumulated interest’ to the principal amount of a loan. In an easy way, Compound Interest can be referred as interest on interest need to be paid on the initial loan amount. So, the action of declaring the interest to the principal is said to be compounding.

All together compound interest is an output of reinvesting interest, instead of paying it out. So, the interest need to be paid on the next period is the sum of principal amount and previously accumulated interest.

Compounding Frequency

On regular basis, the number of times over a period of time the accumulated interest is basically capitalized is called as compounding frequency. The frequency for compounding can be yearly, half-yearly, monthly, quarterly, weekly, daily or continuously.

Compounding effects are based on:

  1. The nominal interest rate that is applied
  2. Frequency, on which interest is compounded

Benefits with compound interest

Are you willing to get more returns on your money that is saved or investment made, do you need compound interest on the same? So, you need to know about two types of interest namely ‘simple interest’ and ‘compound interest’. ‘Simple interest’ is to be paid only on the amount that is saved or invested – the principal. ‘Compound interest’ is paid on principal plus on the interest that is already earned.

  • An advantage on savings money
  • Management if cash
  • Practical consideration – The longer the amount is in the account, the interest that is compounded makes a major difference in the compound interest provided.

Online Compound interest calculator

Compound Calculator is an online tool which allows you to calculate compound interest earned on the principal loan amount. This also helps in figuring out the balance amount needed to reach the investment goals.

How to use Online Compound Interest

The basic pre-requites in order to calculate compound interest through the calculator available online are mentioned below.

  • Enter the Principal amount
  • Enter the Interest Rate
  • Enter the Number of times interest added and Number of years
  • Finally, click on ‘calculate’ and obtain the result in few seconds.

Compound Interest Formula

The basic and period compounding calculation methods are most popular and main formula to calculate annual compound interest is;

Here,

P = original sum of principal

P’= New principal interest

r = Nominal annual interest rate

n = compounding frequency

t = this is the total length of time where the interest is applied (basically expressed in years)

And,

The total compound interest that is generated is the output value subtracting the final value from the initial principal, and the formula used is as follows;

The compound interest seems too great when it works in favor of the individual in terms of investment, and it can also be a bad effect if it is working against debts and loans. So, it completely depends on how you handle the same as an individual.

If in case the loan payments are managed properly and a keen concentration is kept on investment, then compound interest is of great advantage. Hope that the information and compound interest calculator helps you in your ways.