How To Calculate My Compound Interest?

Compound interest involves adding the amount of interest earned on the principal amount back to the principal for subsequent interest calculations. The information that is needed to calculate your compound interest is the principal interest, the rate of interest and the term of the loan. The formula for compound interest is FV=PV (1+i)^n. Where FV is the future value of the investment, PV is the Present value or the amount invested, "I" is the rate of interest and "n" is the term or period of the loan. Complications arise if the interest rate is variable and if the interest rate is compounded more than once a year.

The amount of interest charged can vary greatly based on weather the amount is being charged annually or monthly. A five percent monthly compounding rate of interest can result in an interest earning which is far greater than a sixty per cent interest charge annually as it can work out to around a hundred percent annual interest rate.

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