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The addition of interest to the principal to get another interest is called compounding. Bank interest calculator excel download. 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 also applicable for loan. 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. If you are not a finance people or don't know much about finance but want to know how the banks calculate your savings or loans amounts, you should understand compound interest first.Compound interest is an interest that arises when interest is added to the principal everytime the interest is due, so the total amount will be calculated together to earn next interest.

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