Compound interest is a formula used by banks and credit unions in loans and investments for calculating interest on the invested amount of money.
It is an interest you earn on the initial amount plus interest which is accumulated by previous periods.
Simple interest is somewhere different from the compound interest. It is calculated only on the initial sum of money. And compound interest is interest on the principal amount plus accumulated interest.
The formula for calculating compound interest is as follows:
FB = ID * (1 + R/CF) ^ (T*CF)
- FB - Final balance or similarly called final value or future value,
- ID - Initial Deposite or also referred as a principle amount or present value,
- R - Expected annual interest rate,
- T - Tenure or term,
- CF - Compound frequency means that the interest is how many times compounded per year.
What can you do with Compound Interest Rate Calculator?
- It helps to calculate compound interest and helps to project your future interest earnings.
- Users can see the accurate final balance and interest. And also can see the final balance in words.
- The chart represents the growth of the total amount and initial amount by the scale of two years.
- Users can easily see their calculations in detail by the table. Based on the selected compound frequency table describes the opening balance, your earned interest, closing balance and period.
- This calculator helps to share your calculations by URL.