Interest Calculator

How to Use the Interest Calculator

Use the Interest Calculator to calculate how much interest you can earn on an amount of money over a specific period. Choose between simple interest and compound interest, enter your principal amount, interest rate, and time, and the calculator will show the results.

Simple Interest

Simple interest is calculated only on the original principal amount. It does not add previously earned interest to the amount used for future interest calculations.

The simple interest formula is:

Interest = Principal × Rate × Time

For example, if you invest $10,000 at an annual interest rate of 5% for 5 years, you would earn $2,500 in simple interest. The total amount would be $12,500.

Compound Interest

Compound interest allows interest to be added to the balance and then earn additional interest over time. The calculator lets you choose how often the interest is compounded.

Common compounding periods include annually, semiannually, quarterly, monthly, and daily.

Simple Interest vs. Compound Interest

With simple interest, interest is calculated based only on the original principal. With compound interest, previously earned interest becomes part of the balance used to calculate future interest.

Because of this, compound interest can produce a higher final balance when money remains invested for a longer period.

Interest Calculator Example

Suppose you invest $10,000 at an annual interest rate of 5% for 5 years.

With simple interest, the investment earns $2,500in interest, resulting in a total of $12,500.

With monthly compound interest, the investment earns approximately $2,833.59, resulting in a total of approximately $12,833.59.

Frequently Asked Questions