Calculate compound interest earned on your savings or deposits.
Total Amount
$10,885.54
Interest Earned
$885.54
Principal Amount
$10,000.00
Effective Annual Rate
4.33%
This savings tool computes compound interest using the formula: A = P(1 + r/n)^(nt), where A is the future value, P is the principal amount, r is the annual interest rate, n is the compounding frequency per year, and t is the time in years. Compounding means you earn interest on your interest, causing your balance to grow exponentially over time.
1. Input the initial deposit or Principal Amount. 2. Enter the annual nominal Interest Rate offered by the bank. 3. Enter the deposit term in months. 4. Select the compounding interval (Monthly, Quarterly, or Annually) to calculate the yield.
Total Amount shows the final balance (principal + accumulated interest) at the end of the term. Interest Earned is the net profit gained from compounding. The Effective Annual Rate (EAR) shows the actual annual return taking compounding into account.
FAQ
Compound interest is the addition of interest to the principal sum of a deposit or loan. In simple terms, it is earning interest on interest previously accumulated.
The more frequently interest is compounded, the higher your final return will be. For example, compounding monthly yields slightly more than compounding quarterly or annually at the same nominal rate.
Categories · Banking & Interest