Interest Calculator

Calculate simple or compound interest on your investments and loans. Determine how much interest you'll earn or pay over time.

Calculate Interest

Results

Interest Earned
$2,833.59
Total Amount
$12,833.59
Effective Annual Rate
5.67%

How Interest Calculation Works

Simple Interest

Simple interest is calculated only on the principal amount. The formula is:

Interest = Principal × Rate × Time

This method is commonly used for short-term loans and basic savings accounts.

Compound Interest

Compound interest is calculated on both the principal and accumulated interest. The formula is:

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

Where A is the amount, P is principal, r is annual rate, n is compounding frequency, and t is time.

Example Calculation

For a $10,000 investment at 5% annual interest for 5 years:

  • Simple Interest: $2,500 interest, $12,500 total
  • Compound Interest (Annual): $2,762.82 interest, $12,762.82 total
  • Compound Interest (Monthly): $2,833.59 interest, $12,833.59 total

Interest Calculation Tips

  • Higher compounding frequency increases returns
  • Time is the most powerful factor in compound interest
  • Consider inflation when evaluating real returns
  • Compare APY (Annual Percentage Yield) for accurate comparisons
  • Reinvest interest to maximize compound growth
  • Start investing early to benefit from compound interest