Compound Interest Calculator
VS
Mortgage Calculator
Compound interest is a lot different than the interest you pay on your mortgage. The interest calculated out over time on a mortgage is something being charged to you VS given to you.
Compound interest is interest made on top of interest. So if you have $5000 in your savings account and you don't plan on spending it for a few years you can invest in a CD, or Certificate of Deposit. This is a completely risk free investment that any bank will accept. They offer an interest rate to you for giving them your money.
The bank will invest the money in other things such as mortgages for others to make more money than the interest that they give you. Remember that this calculator is much different than the mortgage calculator on my website. It calculates how much you will make over time VS how much you will pay over time.
Now you can use a compound interest calculator to figure out what you $5000 will turn into over the few years that you have it in the bank. Check around for the best interest rate so that you can make the most money possible.
Once you know how long you want to leave the money in the CD and you have the current interest rate you can use the calculator to figure out how much you will make.
Compound interest works like this. Let's assume a very high but easy for numbers interest rate of 10%. You will make about $500 on $5000 at a 10% interest rate over 1 year. Well you will actually make a little more than that because the interest compounds each month.
So during the first month you would make 10% interest which equals $41.66 + the $5000 you already had which is now $5041.66. Now the next month you will get 10% interest on $5041.66 which is $42.01 which you can see is slightly higher. That's how it compounds because each month you get paid on the new balance amount.
The reason the bank does that is because they have more money to get interest on themselves so everyone makes more money. | 
