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Compound Interest Calculator

What is Compound Interest?

Compound interest is the interest earned on savings calculated as the sum of the initial principal plus the accumulated interest from previous periods. It is a complex process that involves adding the initial principal amount plus any interest that has not been paid.

The interest result is highly beneficial to your savings since the interest compounds over time. This greatly affects your savings leading to a larger asset base in the future.

How Our Calculator Works?

Our calculator will help you understand the compounding interest over time. Using the compounding interest formula, you can determine how your money might grow with regular deposits.

How Do We Calculate Compound Interest?

When calculating your compound interest, we take into consideration the following:

  • Deposit Amount - how much money did you initially put into your account
  • Interest Rate - how much is the interest rate given by the bank or the financial institution you’ve selected?
  • Saving Term - how long do you intend to save, this can be in a short span of months or even years.

The results area shows you how much you’ll save. It shows the Total Interest Saved and the Yield Rate. These two data will be shown annually, monthly, and daily.

Pros and Cons of Compound Interest

Pros of Compound Interest

Compound interest when applied to savings can help in growing your asset base. It can help you increase wealth in the future. The term compounded means your interest earns interest. So, if you deposit 3000 with an interest rate of 3% any interest you get will be added back to the amount you’ve saved. The accumulated amount will then earn another 3% interest come the next interest term period.

Cons of Compound Interest

Compound interest is great for savings but not for debt. The compound nature results in an ever-increasing balance owed and increases the payable interest as well. This accelerates the rate of debt growth each month. Hence, you need to be extremely cautious with loan products offered at a compounded interest rate.

If you need help comprehending the confusing and abstruse concept of compound interest, don't hesitate to speak with a highly qualified and expert Excellence Finance Mortgage Broker today.

Disclaimer: Please note that the highly intricate and difficult calculations provided by this calculator are only an estimate and do not include all fees and charges. They should not be used as the sole basis for making a decision regarding a loan.

Additionally, interest rates and other costs may change over time, which can have a highly complex and confusing impact on the total cost of the loan. Therefore, borrowers should consider discussing their individual and bewildering financial situation with a highly qualified and authoritative Australian Credit Licensee or Authorised Credit Representative.

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