Interest Calculator: Compute Simple & Compound Growth

Whether you are calculating the return on a new savings account or figuring out how much interest you will owe on a personal loan, understanding how your money grows (or how your debt accumulates) is the foundation of financial literacy.

Our free online Interest Calculator allows you to instantly project the future value of your investments or debts. With full support for both Simple Interest and complex Compound Interest calculations, you can accurately model virtually any financial scenario in seconds.

Simple vs. Compound Interest

It is vital to know which type of interest your bank or lender is using, as the results can be drastically different over time:

• Simple Interest: This is calculated only on the principal amount. If you invest $1,000 at 5% simple interest, you earn $50 every year, forever. It never accelerates.
• Compound Interest: This is "interest on interest." You earn interest on your original principal, plus any interest that has already accumulated. Over long periods, compound interest causes your wealth to grow exponentially.

How to Use the Calculator

• Step 1: Choose Your Formula. Use the toggle at the top to select either Simple or Compound interest. Most modern bank accounts, credit cards, and investments use Compound.
• Step 2: Enter the Principal. This is your starting amount.
• Step 3: Enter Rate & Time. Input the annual interest rate (as a percentage) and the total number of years the money will grow.
• Step 4: Select Compounding Frequency. If you selected Compound Interest, specify how often the interest is applied. (e.g., Monthly, Annually, Daily).

The Power of Compounding Frequency

When dealing with compound interest, the frequency of compounding can significantly impact your final total. The more frequently interest is compounded, the faster your money grows.

For example, an account that compounds Daily will yield a slightly higher total return at the end of the year than an account with the exact same interest rate that only compounds Annually. Play with the frequency dropdown in our tool to see exactly how much extra money frequent compounding generates.