When it comes to money you’re always on one end of it: coming in or going out. In each case it’s handy to know what you really owe or what profits are coming in.

One of the most common (and easiest confused) calculations is compound interest. Compound interest is what is added to the principal every time interest is due, so the total amount will be calculated together to earn the next interest.

The addition of interest to the principal to get another interest is called compounding. You will see that some banks put advertisement about daily interest rate, weekly interest rate which mean your savings amount will grow based on that interest period. For example, a saving with $100 initial principal and 1% interest per month would have a balance of $101 at the end of the first month, $102.01 at the end of the second month, and so on.

This compound interest calculation is also applicable for loans. So, make sure that you read carefully your loan terms especially about how your lender applies the interest terms. This compound interest calculator is a simple calculator that will calculate the future value of your savings or loan amount based on daily, weekly, quarterly, semi-annually and annually compounded period. And you can also see how the total interest applied to your savings or loans based on that compounded period.

You can do that calculation with any Excel spreadsheet, with hints available through Microsoft support at http://support.microsoft.com/kb/141695. And it’s a handy tool for other calculations, including amortization schedules, present value, car loans and many more.