Interest Calculator

How this interest calculator works

Interest is the cost of borrowing — or the reward for saving — expressed as a rate over time. This calculator compares two common models side by side: compound interest (interest earns interest) and simple interest (interest only on the original principal).

Compound vs simple

Compound interest uses A = P(1 + r/n)^nt, where P is principal, r is the annual rate as a decimal, n is compounding periods per year, and t is years. The more frequently interest compounds, the higher the future value for the same stated annual rate.

Simple interest grows linearly: interest = P × annual rate × years. Banks rarely use pure simple interest for long-term savings, but it is a useful baseline and appears in some short-term loans or teaching examples.

Worked example

$10,000 at 5% for 10 years, compounded monthly, grows to roughly $16,470. The same principal under simple interest earns $5,000 of interest ($15,000 total). The gap is the effect of compounding — small at first, larger over longer horizons.

How to use it

1. Enter the starting principal.
2. Enter the annual interest rate as a percent.
3. Enter the number of years.
4. Choose how often interest compounds (for the compound result).
5. Compare the compound future value with the simple-interest comparison line.

Frequently asked questions

Which compounding frequency should I pick?

Match the account: many savings accounts compound daily or monthly; some bonds use semi-annual. If unsure, monthly is a common planning default — then compare with annual compounding to see sensitivity.

Does this include regular deposits?

No. For ongoing contributions, use the investment calculator instead.

Limitations

Taxes, fees, and variable rates are ignored. Inflation is not modeled. Results are estimates only and are not financial advice.

Results are estimates only and are not financial advice.