Are you looking for an online tool that gives you a clear estimate of compounding on your savings? If yes, then you have come to the right place. In this blog, we are going to tell you the importance of compound interest calculator, working principle, and its basic principles.
What is the compound interest calculator?
A compound interest calculator is a tool that is used to estimate the value of the compound interest on the investment or savings. This tool helps investors in various ways, such as picking the best investment plan, giving you clear insight of the compound interest, customizable features that enable you to alter the values until you get satisfied with the result.
The results displayed by this tool are hypothetical/ basis on the inputs. If you alter the input values, your output will automatically get changed — this customizable feature of this tool help in making a better investment decision.
Features of compound interest calculator:
- A compound interest calculator is an online tool that is user-friendly, responsive and accessible from any platform.
- The compound interest calculator customize feature allows users to change the values of the data as per the investment plans.
- The compound interest calculator helps you to determine the exact value of the compound interest.
- The best feature of this calculator gives you a clear insight into how much you are earning on your savings and investment.
Compound interest calculator VS compound interest equation:
The use of a compound interest calculator and compound interest equation is the same. But, when it comes to speed and accuracy, the compound interest calculator always in the first position. If you choose the compound interest equation, there will be a possibility of getting an error in the result. So, it would be better to use a calculator over the compound interest equation.
Calculating compound interest by using compound interest equation:
The standard formula of compound interest:
P1 = P(1+r/n)nt
Where P1 stands for the final amount.
Where P stands for principle.
Where R stands for rate of the interest.
Where N stands for the number of times that interest is compounded.
Where T stands for the time the money is borrowed.
Calculating compound interest by using compound interest calculator:
- Access the online interest calculator.
- Next, you are required to enter the data.
- Click on the submit button.
- Get the result
Types of compound interest:
There are generally two types of compound interest rates that we have mentioned below-
- Periodic compounding: In this method, the interest rates is applied, and intervals generated. The interest which is generated is added to the principal. Here intervals mean monthly, weekly, bi-annually, and annually.
- Continuous compounding: Under this method, you can use the compounding equation and get the result on the basis of your input values.