Understanding Compound Interest

Compound interest is 'interest accrued on interest' and how frequently interest is compounded effects the total amount of interest that will accrue or be charged over time. The more frequently interest is compounded; the more total interest is accrued or charged. Interest rates are normally quoted as nominal annual rates with an included compounding frequency. For example, a savings account that quotes daily interest at 5 per cent per annum.

How then can a consumer accurately compare various loan or investment offerings? TIMcalc Personal Financial Calculator's exclusive 'Annual Equivalent Rate' feature, converts these various nominal rates and compounding frequencies into an annual equivalent rate that the user can use for quick and accurate comparisons. Also, all completed calculations include total accrued or charged interest summaries that makes comparing different loans, mortgages or investments a snap.

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You don't need to be an expert in time value of money theory to use TIMcalc, it does all the heavy lifting for you. Having an easy to use portable financial calculator, will help you make informed money decisions, saving you interest dollars and increasing your investment returns.

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