## What is Interest?

Interest; It is the money received in return for the use of the money lent to a bank or similar institution to operate the money for a certain period of time. Loan and Deposit rates are the two most well-known types of interest.

### What is Loan Interest?

Loan interest is the amount of money borrowed from a bank or similar institutions for a need, added to the principal according to the maturity received. It is money paid in exchange for the operation of money.

The loan interest is calculated by applying interest again to the remaining principal in each payment period. For this, the principal amount and the interest rate are multiplied and the taxes of the country where you will use the loan are added. Generally, the first months of your loan debt are taken as 90% principal 10% interest debt by banks. This ratio is then balanced.

Interest rates vary according to the monetary policy of the countries.

### What is Deposit Interest?

Mevduat faizi, banka veya benzeri kurumlara işletmesi için ödünç verdiğiniz paranın karşılığında bankanın size geri ödediği günlük, aylık veya yıllık para tutarıdır.

Basit faiz hesaplama aracımız ile belirlediğiniz vade sonunda ne kadar faiz ödemesi alacağınızı hesaplayabilirsiniz.

If the interest amount is not withdrawn from the bank, the interest is recalculated by adding it to the principal for the next maturity. You can use the compound interest calculator to calculate this form of interest.

## What is Compound Interest?

Compound interest is when the accumulated interest is added back to your principal total and future interest calculations are made on the sum of both the original principal and interest. In other words, it is the interest obtained by adding the periodic interest to the principal.

### How to Calculate Compound Interest?

The interest obtained at the end of the period is added to the principal and interest in the new period is charged over the new principal formed with the interest added in the previous period. In this way, interest is charged to the interest.

#### Compound Interest Formula

If the compound interest calculation is done as periods (monthly, quarterly, annually), it is also called intermittent compound interest calculation.

The formula for compound interest is::

**A = P x (1 + r)**^{n}A = Maturity PrincipalP = Principalr = Interest Raten = Maturity Period##### How to Calculate Compound Interest Example

Example - 1: What will be the principal value of the $1000 deposited in the bank at an annual interest rate of 10%, at the end of the 3rd year, with the compound interest method?

Solution : P = $1000 r = 10 / 100 n = 3 yılA = 1000 x (1 + 0.1)^{3}The total money at the end of year 3 is calculated as $1331.

Example - 2: An investor invested $32000 in compound interest for 5 years at an annual interest rate of 30%. How much money does the investor receive at maturity?

Solution : P = $32000 r = 30 / 100 n = 5 yılA = 32000 x (1 + 0.3)^{5} = $118.813,76The total amount that the investor will receive at the end of the 5th year is $118,813,76.

## FAQ

### What is Compound Interest Formula?

Compound interest formula: **A = P x (1 + r)**^{n}

### Difference Between Simple Interest and Compound Interest

Simple interest is calculated as a percentage of the principal, while compound interest continues to be calculated with the amount of interest added to the principal at the end of the first maturity. In other words, the incoming interest is re-operated in a way.

### Is Compound Interest Applied in Current Account Contract?

Interest may be charged to the current account. Interest is charged separately after the receivables are recorded in the current account. At the end of the period, applications are seen in the form of compound interest.