Interest Calculator
Calculate simple or compound interest on any amount. See how your money grows over time with different rates and compounding frequencies.
A = P(1 + r/n)^(nt)Tips & Notes
- ✓Start investing early—compound interest rewards time more than amount.
- ✓Compare effective annual rates (EAR) rather than nominal rates when evaluating accounts.
- ✓Monthly compounding yields about 0.5% more than annual compounding on a 6% rate.
- ✓The Rule of 72: divide 72 by the interest rate to estimate doubling time in years.
Common Mistakes
- ✗Confusing nominal rate with effective annual rate when comparing products.
- ✗Not accounting for inflation when projecting real purchasing power growth.
- ✗Assuming simple interest when the product actually compounds (or vice versa).
- ✗Forgetting that taxes on interest reduce the effective return.
Interest Calculator Overview
Simple vs Compound Interest
Simple interest is calculated only on the original principal: I = P × r × t. Compound interest is calculated on the principal plus accumulated interest: A = P(1 + r/n)^(nt). The difference grows dramatically over longer periods.
The Power of Compounding
More frequent compounding produces slightly higher returns. Daily compounding earns more than annual compounding at the same stated rate. The effective annual rate (EAR) captures this difference and allows fair comparison between products with different compounding frequencies.
Practical Uses
Use this calculator to compare savings account yields, estimate investment returns, calculate loan interest costs, or understand how inflation erodes purchasing power over time.