Entry — Interest
Calculate simple or compound interest on a principal amount and see how much interest you can earn or pay over time.
Simple interest is calculated only on your original principal for the whole period.
Starting amount can’t be negative.
Enter a rate between 0% and 30%.
See the Inflation Calculator for a dedicated purchasing-power tool.
- Original principal$0
- Interest earned$0
- Interest rate0.00%
- Time period0
- Interest typeSimple
| Year | Starting Balance | Interest | Ending Balance |
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See The Difference
Simple Interest vs Compound Interest
Using your current principal, rate, and time period, here’s how much interest each method produces.
Simple Interest
Compound Interest
The Math
Interest Calculator Formula
Both methods start from the same three numbers — principal, rate, and time — but treat growth differently.
- Principal — your starting amount.
- Rate (r) — annual interest rate, as a decimal.
- Time (t) — the period, in years.
- n — compounding periods per year (compound interest only).
Worked Example
Interest Calculator Example
- Principal
- $10,000
- Annual rate
- 5%
- Time
- 5 years
- Simple interest
- $10,000 × 5% × 5 = $2,500
- Simple final amount
- $12,500
With simple interest, $10,000 at 5% for 5 years earns a flat $2,500, for a final amount of $12,500.
- Compound interest (annual)
- ≈ $2,762.82
- Compound final amount
- ≈ $12,762.82
The same numbers under annual compounding earn about $262.82 more, because interest starts earning interest of its own each year.
Understanding The Basics
What Is Interest?
- 01
The cost — or reward — of money over time
Interest is what a borrower pays a lender, or what a bank pays a saver, for the use of money over a period.
- 02
Why lenders charge interest
It compensates the lender for risk and for not having access to their money during the loan period.
- 03
Why banks may pay interest
Banks often pay depositors interest in exchange for being able to use those deposits elsewhere.
- 04
The rate affects the total
A higher rate means more interest earned or owed, for the same principal and time.
- 05
Time matters too
The longer the period, the more interest accumulates — especially with compounding.
A Key Distinction
Simple Interest vs Compound Interest
Simple interest is calculated only on the original principal, for the entire period — it never changes even as time passes.
Compound interest is added to the balance at each compounding period, so future interest is calculated on a growing amount. Explore this more directly with the Compound Interest Calculator.
“Simple interest pays you on what you put in. Compound interest pays you on what you put in — and on what it’s already earned.”
A Common Mix-Up
Nominal vs Effective Interest Rate
These describe different things, and it matters which one you’re comparing.
- 01
Nominal annual rate
The stated yearly rate before accounting for how often it compounds.
- 02
Effective annual rate
The actual annual growth rate once compounding frequency is factored in — always equal to or higher than the nominal rate.
- 03
APR and APY are not interchangeable
APR generally reflects a nominal rate; APY reflects the effective rate after compounding. Compare like with like.
Transparency
Interest Calculator Assumptions
- 01
Interest rates can change
This calculator assumes one constant rate for the entire period.
- 02
Real-world account terms vary
Minimum balances, rate tiers, and compounding rules differ by lender or institution.
- 03
Fees may affect results
Origination fees, account fees, or service charges aren’t included unless reflected in your rate.
- 04
Taxes may affect actual returns
Interest income may be taxable depending on your account type and jurisdiction.
- 05
Contribution timing can affect results
Real deposits or payments may not land exactly on schedule.
- 06
Results are estimates
Future rates and real-world outcomes are not guaranteed.
Questions
Frequently Asked Questions
See what your own numbers earn.
Free, fast, and no account required — run the calculator above with your own amount and rate.