Interest Calculator - Compares Simple Monthly Payment To Compound Accrual
This simple interest calculator figures both monthly interest income payments and compound growth so you can compare the results side-by-side.
Note: The results of this interest calculator are based on monthly compounding.
An interest is the amount you pay for borrowing or the money you earned from your investment. If there were no interest rate, lenders would have no reason to let you borrow money. And if you couldn’t borrow money, you could never pay for college, buy a house or a car, or enjoy many of the other advantages of life with credit, like ordering movies and books online with a credit card. The interest is usually calculated based on the principal and it can be easily calculated using the interest calculator.
Variable Vs. Fixed Interest Rate
A variable interest rate, which is also known as floating interest rate does not have fixed life and is dependent to market performance. If the market is volatile, interest rates also changes a lot during the entire course of the term. If you do not expect to keep the loan for a long time, then a variable rate may be a better choice. The downside to this is that if the interest rate rises, you may not be able to meet your payment obligation. The disadvantage to this is that if the interest rate rises, you may not be able to meet your payment obligation.
The fixed interest rate on the other hand does not change over the course of the term. The advantage of fixed interest rate is it allows you to plan your spending easily since you know exactly how much you will be paying at the end of the term. The disadvantage is that if interest rates rates drop significantly, the borrower still continues to pay the higher rate.
Simple Vs. Compounded Interest
Simple interest rate is calculated by multiplying principal by the interest rate by the number of payment periods over the life of the loan. While compound interest refers to charges that the borrower must pay not just on the principal amount borrowed, but also on any interest outstanding at that point in time. The elements you need to keep in mind when calculating interests are:
Comparing Interest Rates
Before you invest or borrow money, first compare and calculate the interest. Interest rates play an important part in determining what are the chances of getting a higher return or how much you will save for paying interest. Use the interest rate calculator to calculate the interest. Comparing interest rates can help you reduce the cost of having an overdraft by helping you find an account with a lower rate of interest charged on your borrowing. It can also help you find the best available rate of interest on your credit so you can earn more while your money is sitting in your account.
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