Compound Interest Calculator

Do you know what a compound interest calculator is? Well, it is not a device that measures how well you would fit into the lifestyle of “Big Love.” A compound interest calculator is a device that allows you to easily figure out how much interest you will earn from a plan that compounds interest, or, of course, how much interest you would be paying on a loan that compounds the interest you pay.

There are two basic types of interest: simple and compound. If you are getting an automobile loan, for example, you would probably be better off getting a loan that offers simple interest. Simple interest is well simpler. And normally will save you money over the length of the loan.

If you are lending money out, you would be better served to have the interest compounded. Compound interest is well compounded. In turn you will have a much better return on the money you lend out.

Simple interest is easier to figure mathematically, and it works like this. Of course, the interest rate is the amount of money it costs to borrow money. If your interest rate is a simple rate, the amount you pay back is calculated only on the original principle.

Compound interest is calculated on both the amount of the principle plus any outstanding interest. If you are paying money out, you are going to pay quite a bit more for compound interest. If you are receiving interest on an investment, you are going to get a lot more with compound interest.

Compound Interest = good if investing; bad if borrowing
Simple Interest = bad if investing; good if borrowing

Regardless of whether you are dealing with simple interest or compound interest, it can be difficult to figure out exactly how much money you are talking about, but for the math challenged, have no fear. There is a way to turn that “percentage rate” into actual dollars and sense. Simple interest calculators and compound interest calculators do just that.

Thanks to the genius and mathematical prowess of the computer and math gurus out there, you can determine how much interest you will be earning (or spending) in your investment (or loan).

Just about any banker, financial advisor, or even many financial websites offer both simple interest calculators and compound interest calculators. All you have to do is put in the interest rate, the length of time, and the amount of principle and the simple interest calculator will show you very clearly how many dollars and cents that percentage rate actually is.

Regardless of the simple interest calculator or the compound interest calculator you still have to apply the best calculator to any financial decisions you may make. And that is your brain. Make your investment decisions wisely.