A Compound Interest Calculator helps users determine how their money grows over time when interest is added to the principal amount periodically. Unlike simple interest, compound interest allows you to earn interest on both the initial amount and the accumulated interest, resulting in faster growth.
| Input Interest | Compound | Output Interest | Compound | |
|---|---|---|---|---|
% | = | % |
Interest rate calculations are mathematical conversions based on standard formulas. Actual financial products may have additional fees, terms, or conditions that affect the true cost of borrowing or return on investment.
Interest is the cost of using borrowed money, or more specifically, the amount a lender receives for advancing money to a borrower. When paying interest, the borrower will mostly pay a percentage of the principal (the borrowed amount). The concept of interest can be categorized into simple interest or compound interest.
Simple interest refers to interest earned only on the principal, usually denoted as a specified percentage of the principal. Compound interest is widely used instead. Compound interest is interest earned on both the principal and on the accumulated interest.
$100 at 10% simple interest for 2 years:
$100 at 10% compound interest for 2 years:
Where:
A₀ = principal amount (initial investment)
At = amount after time t
r = interest rate
n = number of compounding periods
Where:
A₀ = principal amount
At = amount after time t
n = number of compounding periods per year
r = annual interest rate
t = number of years
Where:
A₀ = principal amount
At = amount after time t
r = interest rate
t = time in years
e = mathematical constant (~2.718)
Compare different investment options by understanding their effective annual yields.
Understand the true cost of loans with different compounding frequencies.
Analyze how compounding frequency affects long-term wealth accumulation.
Important: Interest rate calculations are mathematical conversions. Real financial products may have additional fees, terms, or conditions. Always read the fine print and consult financial advisors.