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Over time, the magic of compounding can help your savings accounts and investments grow even faster. See how much of a difference it could make for you using the compound interest calculator below.

What is the Compound Interest Calculator?

Compound interest is simple to understand: It includes your initial investment, as well as the interest you have accrued. Savings that earn compound interest grow more quickly over time.

Every time the interest is added to the original principal in an account that pays compound interest, such as a savings account, it is recalculated. In other words, as more money is deposited into the account, more interest is earned, and this leads to higher returns.

Compound Interest Example: An interest rate of 0.50 percent per year on $10,000 would yield $51 in interest for the first two years and $53 for the third year. A total of $513 in interest would have been yours after ten years.

How is the Compund Interest calculated?

Compounded Interest = [ Initial Investment * (1+ r) ^ n ] – Initial Investment

Future Value of Investment = Initial Investment * (1+ r) ^ n

r – rate per period
n – number of periods

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