Interest Calculator

Calculate Your Interest

Enter your principal, rate, and time period

Enter your financial details to calculate interest earned or owed.

Principal Amount ($)

Please enter a valid principal amount

Annual Interest Rate (%)

Please enter a valid interest rate (0-100)

Time Period

Please enter a valid time period

Compound Frequency

Calculation Results

View your interest and future value

Interest Results

Total Interest: $2,500.00

Future Value: $12,500.00

Calculation Type: Simple Interest

Principal
$10,000

Future Value
$12,500

How It Works

Enter your principal amount, interest rate, and time period. Choose between simple interest (linear growth) or compound interest (exponential growth with interest earning interest).

Power of Compounding

Compound interest grows your money exponentially over time. The more frequently interest compounds, the faster your balance grows through "interest on interest."

Privacy First

All calculations happen in your browser - no personal or financial data is sent to servers. Your information stays completely private and secure.

How the Interest Calculator Works

Choose your calculation mode: Select Simple Interest for linear growth or Compound Interest for exponential growth where interest earns additional interest.
Enter your principal amount: This is your initial investment or loan amount. The calculator works with any currency.
Input your annual interest rate: Enter the yearly percentage rate. For loans, this is typically the APR; for savings, it's the APY or nominal rate.
Set the time period: Specify how long your money will be invested or borrowed. The calculator automatically converts between months and years.
Select compounding frequency (for compound mode): Choose how often interest is calculated and added to your balance – daily, monthly, quarterly, or annually.
Review your results: See your total interest earned or owed, plus the future value (principal + interest).
Compare scenarios: Adjust inputs to see how higher rates, longer terms, or different compounding affects your outcome.
Use for planning: Apply these numbers to your real financial decisions about saving, borrowing, or investing.

Interest Calculation Formulas

Simple Interest Formula

I = P × r × t

A = P + I = P(1 + rt)

I = Total interest, P = Principal, r = Annual interest rate (decimal), t = Time in years, A = Future value

Compound Interest Formula

A = P (1 + r/n)^(nt)

I = A - P

A = Future value, P = Principal, r = Annual interest rate (decimal), n = Compounding periods per year, t = Time in years, I = Total interest

Step-by-Step Examples

5-Year Certificate of Deposit (CD)

P = $10,000, r = 3.5%, n = 12, t = 5
A = 10000 × (1 + 0.035/12)^(12×5)
A = $11,908.40

Total interest earned: $1,908.40

3-Year Personal Loan

P = $7,500, r = 8%, t = 3
I = 7500 × 0.08 × 3 = $1,800
A = 7500 + 1800 = $9,300

Monthly payment: $258.33

Credit Card Debt

P = $2,000, r = 18%, n = 365, t = 1
A = 2000 × (1 + 0.18/365)^(365×1)
A = $2,394.50

Total interest: $394.50

Understanding Interest Calculations

Interest calculations help you project the growth of savings or the true cost of borrowing. Simple interest grows linearly at a constant rate, while compound interest grows exponentially as interest earns additional interest. Understanding these calculations empowers better financial decisions.

Simple vs. Compound Interest

Simple interest is straightforward: you earn or pay the same interest amount each period based only on the original principal. Compound interest, however, calculates interest on both the principal and accumulated interest, leading to accelerated growth or costs over time.

Practical Use Cases

Savings Account Growth: Project how much your emergency fund will grow with compound interest
Investment Planning: Estimate returns from fixed-income investments like CDs or bonds
Loan Cost Analysis: Understand the true total cost of personal loans or auto financing
Debt Management: See how credit card interest compounds on carried balances
Financial Goal Setting: Calculate how much to invest today to reach future targets

Practical Example: Retirement Savings

Imagine you invest $10,000 in a retirement account at age 30 with 7% average annual return compounded monthly.

At age 40 (10 years):

Calculation: A = 10000 × (1 + 0.07/12)^(12×10) = $20,096.61

At age 60 (30 years):

Calculation: A = 10000 × (1 + 0.07/12)^(12×30) = $81,073.65

At age 70 (40 years):

Calculation: A = 10000 × (1 + 0.07/12)^(12×40) = $160,462.14

This demonstrates the power of compounding over longer time horizons.

How to Read the Results

Total Interest shows exactly how much your money earned (if saving) or how much extra you'll pay (if borrowing). This is the cost or benefit of time and the interest rate.

Future Value is your ending balance – the principal plus all accumulated interest. For savers, this is your target amount. For borrowers, this is your total repayment obligation.

When comparing simple vs. compound results, note that compound interest grows exponentially, especially over longer periods. This "interest on interest" effect is why starting to save early has such a powerful impact. For debt, compounding makes carrying balances increasingly expensive.

Frequently Asked Questions

What's the difference between simple and compound interest?

Simple interest is calculated only on the original principal. Compound interest is calculated on the principal plus accumulated interest, leading to exponential growth. Savings accounts typically use compound interest, while some personal loans use simple interest.

How does compounding frequency affect my returns?

More frequent compounding (daily vs. annually) results in slightly higher returns because interest is calculated and added to the balance more often, allowing "interest on interest" to accumulate faster. The difference is most noticeable over long periods.

What's the difference between APR and APY?

APR (Annual Percentage Rate) doesn't include compounding effects, while APY (Annual Percentage Yield) does. APY gives you the actual annual return, accounting for how often interest compounds. Always compare APY for savings and APR for loans.

How do I calculate interest on a loan?

For simple interest loans: Interest = Principal × Rate × Time. Most auto and personal loans use simple interest. For compound interest debts (like credit cards), use the compound formula. Your monthly statement should show your interest calculation method.

When should I use simple interest calculations?

Use simple interest for short-term personal loans, some auto loans, and when money is borrowed or lent informally. It's straightforward and predictable. Most investment scenarios should use compound calculations for accuracy.

How can I maximize compound interest for savings?

Start early (time is the most powerful factor), seek higher rates, ensure interest compounds frequently (monthly or daily), and avoid withdrawals that reset your compounding progress. Even small regular contributions significantly boost final results.