Use this compound interest calculator for comparing and converting interest rates for different compounding periods. It is more of a converter that tells you how much one compound interest would be equal to in another compound interest option.
The term was once described by Albert Einstein as greatest discovery of all times in mathematics. However, there is no rocket science involved in calculating compound interest. It is simply the interest that is earned on original amount as well as existing interest that is accumulated. So, it is different from the regular interest which only applies to original amount. As you are also earning interest on the accrued interest amount, earnings tend to compound with the passage of time and your funds grow exponentially.
Things can, however, get complicated in case if different compounding frequencies are involved. So, to make things easier, this compound interest calculator allows you to make comparisons of different popular frequencies that are used for compounding interest and helps you to visualize how they are different from each other.
Here are the compound interest formulas that are used commonly.
. Basic Compound Interest
The formula for basic compound interest is:
A t = A <0(1+r)n
Here A0 refers to initial investment or principal amount, At refers to amount after a given time t, n is the number of periods for which the interest has to be compounded (usually the number of years), and r is the rate of interest.
If the compounding frequencies represent daily, weekly, or monthly schedules then here is the formula for these.
At = A0 × (1 + r/n)nt
Here A0 refers to initial investment or principal amount, At refers to amount after a given time t, n is the number of periods in the year, t is number of years and r refers to rate of interest.
As mentioned earlier, there are different compounding frequencies for the calculation of compound interest, this compound interest calculator takes all of them into account. The compound interest calculator works more as a type of converter that tells you what each compounding frequency would yield in another.
The compound interest calculator here gives you an Input interest field where you have to enter the rate of interest and then you have to select how it is compounding. The list for compounding options include Daily, Weekly, Monthly (APR), Quarterly and Annually (APY). Then there is an output interest field which is populated as you hit the calculate button. There is another list of compounding frequencies beside output filed where you can select an appropriate option according to which frequency you'd like to see the compounding interest in. Just hit the calculate button and the compound interest calculator will not just populate the output field but it also shows the result below.
The result shows you the equivalent amount for the compound interest you had entered in your chosen compounding frequency.
So, you can use this compound interest calculator for any such conversions that you want to perform. You can rely on the results shown by the calculator and can use them in whatever application you like.