Knowing More About

Compound Interest Calculators

Even before we begin getting into the details of the

compound interest calculatorlets understand the what is meant by compound interest first.Whenever one borrows money from a bank or a financial institution, they take up an obligation and are responsible to pay them back. Banks and financial intuitions are in the business of making more money. Hence the money they lend comes associated with a charge for the convenience it provides for the borrowers often referred to as interest.

If the lending institutions get the money they lend quickly, they can lend it further to some other borrowers and earn interest on the same amount. On the other hand if the money is locked in for a longer period a fixed percentage of interest rate is charged on it which largely depends on the lending institutions and the prevailing market conditions.

Let us understand compound interest through an example.Lets say that an individual borrows an amount of $100 for a period of 3 years where the interest is compounded annually. For the first year, if the rate of interest is 20% of the principal amount of $100 , this would become the $120 for the for the second year calculations and then it would become $144 for the second year and so on.This is the basic principal how the compound interest works.

It is important to know how the compound interest works so as to confirm the amount you will earn on your savings after a stipulated time period. On the other hand, it also gives an idea of the amount that you will require to pay off your debts which you might have taken. Compound interest basically couples the amount of interest and the other charges to be paid apart from the principal on any loan taken.

Calculation of compound interest:

The standard formula for the calculation of compound interest is :

A= p {(1+r/100)} n

Where: P= principal amount in case of loan or investment

A = Sum accumulated after a fixed period of time.

R= rate of interest

N= Number of years

Thus for simple calculations involving calculation over a few years it can be easily done using the basic formula. However, with the home loans or bigger loans involving huge sums, the calculations become tough and hence one needs to take the help of the experts.

Internet is the other option. One can find several calculators on the web which can do calculations at ease. These calculators also provide the principal amount and the interest at different periods.

A Compound interest calculatoris easily available online have made a huge difference in the way an individual used to deal with them. This can be an important aspect ofyour investment goals calculator.Without getting into the details of the calculations, one can simply key in the figures in the formula space provided by these calculators and get he information within minutes. Decisions related to loans, repayments and investments have become very easy with the

investment goals calculators.One can get the tough calculations within minutes which they can use as the base for larger business and personal decisions.

Banks serve as the channels for the circulation of money in an economy. With the basic purpose of making money banks have different plans for their customers wherein they offer them interest on the money the customers deposit with the banks.