TOOLS

Compound Interest ^Calculator

A compound interest calculator quickly shows how savings or borrowing grow over time; most UK firms let a platform or broker like Funding Agent handle the heavy lifting. Understanding compound interest is vital when planning savings or loans. You can learn more about compound interest and how it works.

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How To Use The Compound Interest Calculator

Enter principal amount

Type the starting balance you plan to invest or borrow. Use pounds only or include pence if precision is needed.

Set rate and frequency

Input the nominal annual interest rate then pick how often interest is compounded, for example monthly, quarterly, or annually. For details on interest rates, see interest rate.

Choose term and deposit pattern

Select the number of years and add any regular contributions or withdrawals. Press calculate to view future value, total interest, and effective rate.

^Benefits of Using the Compound Interest Calculator

This calculator lets you test different rates and timings instantly, helping you forecast cash growth, compare bank offers, and set saving targets before committing funds. It supports clear financial planning and rate comparison for more informed funding decisions. For further insights, see <a href="https://www.fundingagent.co.uk/financing-options/business-loans">business loans</a> and the <a href="https://www.fundingagent.co.uk/finance-dictionary/annual-percentage-yield">annual percentage yield</a>.

The calculator lets managers test different rates, terms, and contribution schedules in seconds, making it easier to forecast cash needs, evaluate loan offers, and compare savings products. It helps businesses plan finances with greater clarity and speed.

Plan cash reserves

Compare saving options

Forecast loan costs

Apply for business funding

Generate offers

How Compound Interest is Calculated

Future value formula

FV=P×(1+r/n)^(n×t)

Future value formula

Future value (FV) equals principal P multiplied by (1 plus rate r divided by compounding periods n) raised to the power of n times time t in years. This shows the balance after all compounding periods.

Effective annual rate

EAR=(1+r/n)^n−1

Effective annual rate

The effective annual rate (EAR) converts a nominal interest rate (r) to the equivalent annual rate, accounting for compounding frequency n. EAR equals (1 plus r divided by n) to the n power minus 1. This allows comparison of interest rates on the same basis. Learn more about annual percentage yield.

Interest earned amount

Interest=FV−P−Deposits

Interest earned amount

Total interest earned is calculated as future value minus the principal and any extra deposits. This isolates the growth due strictly to compounding, helping to assess the true return.

Understanding Your Compound Interest Calculator Results

Compare future value

Check the projected balance against your goal or loan payoff target to see if the plan meets business needs. Typical investment horizons vary but understanding investment horizon concepts helps set realistic targets.

Test input sensitivity

Adjust the rate or compounding frequency in small increments; higher rates or more frequent compounding quickly inflate returns or costs. Familiarity with interest rate effects is useful.

Note hidden factors

Results assume reinvested interest and no fees. Banking charges, tax, or early withdrawal penalties will reduce actual gains. See guidance on accrued interest for related information.