Compound Interest Calculators
Work out the compound interest on your savings with these calculators. Use the first calculator to include regular monthly savings deposits. Or use the second calculator to work out interest on a simple lump sum savings amount. You can choose the interval at which you would like to have your interest compounded. Savings calculations can now be shown on a monthly or yearly basis. If you are unsure of what compound interest is, you can read about it here.
Whilst every effort has been made in building the compound interest calculators tool, I am not to be held liable for any special, incidental, indirect or consequential damages or monetary losses of any kind arising out of or in connection with the use of the calculator tools and information derived from the web site. This compound interest calculators is here purely as a service to you, please use it at your own risk.
The calculations given by the compound interest calculators are only a guide. Please speak to an independent financial advisor for professional guidance. Read the full disclaimer.
What is compound interest?
The basic formula for calculating annual compound interest on savings.
Compound interest is the concept of adding accumulated interest back to the principal sum, so that interest is earned on top of interest from that moment on. The act of declaring interest to be principal is called compounding.
Financials institutions vary in terms of their compounding rates - daily, monthly, yearly, etc. As an example, a savings account with $1000 principal and 10% interest per month would have a balance of $1100 at the end of the first month. By the end of the second month, the $1100 amount would have received 1% more, making $1210... and so on...
Daily compounding, monthly compounding, yearly compounding
My compound interest calculators allow you to compound interest on either a daily, monthly, quarterly, half yearly or yearly basis. Your savings account may vary on this, so you may wish to check with your financial institutions to find out which frequency they compound the interest on your savings.
So what difference does the frequency of compounding make to your savings calculation? The line graph below demonstrates the compounding effect of varying frequencies on an initial investment of $1000 with a 20% annual interest rate.
graph from Wikipedia - by Jelson25.
When is interest compounded?
With savings accounts, interest can be calculated at either the start or the end of the compounding period (month or year). With my calculator, above, additions are made at the start of each compounding period.
What is the effective annual rate?
The effective annual rate is the rate that actually gets paid after all of the compounding. When compounding of interest takes place, the effective annual rate becomes higher than the overall interest rate. The more times the interest is compounded within the year, the higher the effective annual rate will be.
Link to this calculator
You can link to this calculator using this HTML code. Simply copy and paste it into your page:
Updates to the compound interest calculators
Version 1.2 (26 Jan 2013)
Following a lot of email requests for monthly compound breakdowns, both calculators now include the option for both monthly and yearly report figures. The calculators are now much more efficient, working without requiring a page re-load. Finally, the graphs have been separated off to more effectively demonstrate the compounding.
If you have any problems using these compound interest calculators, please contact me.