Interest Calculator – Calculate Simple & Compound Interest
Use our free online interest calculator to calculate simple interest, compound interest, and total returns on your investments or loans. Whether you’re planning investments, comparing savings accounts, or calculating loan payments, our calculator provides accurate results instantly.
Calculate Your Interest
How to Use the Interest Calculator
- Enter Principal Amount: Input the initial amount of money you’re investing or borrowing
- Set Interest Rate: Enter the annual interest rate as a percentage
- Choose Time Period: Specify how long the money will be invested or borrowed
- Select Interest Type: Choose between simple or compound interest
- Calculate: Click the calculate button to see your results
Simple Interest vs Compound Interest
Simple Interest
Simple interest is calculated only on the principal amount. The formula is:
Total Amount = Principal + Simple Interest
Simple interest remains constant throughout the investment period and is commonly used for short-term loans and basic savings calculations.
Compound Interest
Compound interest is calculated on both the principal and previously earned interest. The formula is:
Where: A = Final Amount, P = Principal, r = Annual Rate, n = Compounding Frequency, t = Time
Compound interest grows exponentially over time, making it powerful for long-term investments and retirement planning.
Common Uses for Interest Calculators
- Investment Planning: Calculate potential returns on stocks, bonds, and mutual funds
- Savings Goals: Determine how much to save monthly to reach financial targets
- Loan Calculations: Understand the total cost of personal loans, mortgages, and credit cards
- Retirement Planning: Project retirement savings growth over time
- Education Funding: Plan for college expenses and education savings accounts
- Certificate of Deposits: Compare CD returns from different banks
Tips for Maximizing Your Returns
- Start investing early to take advantage of compound interest
- Choose accounts with higher compounding frequencies when possible
- Compare interest rates from multiple financial institutions
- Consider the impact of taxes on your investment returns
- Review and adjust your investment strategy regularly
- Reinvest dividends and interest to maximize compound growth
Frequently Asked Questions
What’s the difference between APR and APY?
APR (Annual Percentage Rate) includes fees and costs, while APY (Annual Percentage Yield) shows the actual rate you earn with compounding. APY is typically higher than APR for savings accounts.
How often should interest be compounded?
More frequent compounding (daily vs. annually) results in higher returns. However, the difference becomes minimal with very high frequencies.
Is this calculator accurate for taxes?
This calculator shows gross returns before taxes. Consult a tax professional for after-tax calculations as tax rates vary by individual circumstances.