Interest Calculator
Calculate compound interest growth for investments and savings.
Interest Calculation
Initial amount invested or borrowed
Annual interest rate (APR/APY)
Investment duration
Interest compounds monthly (12 times per year)
Additional Deposits
Regular additional deposits
Advanced Analysis
Tax rate on interest earnings
Expected annual inflation rate
Interest Results
Compound Interest
Interest earned
Final Amount
Principal + Interest + Deposits
Total Interest
Interest earned
Interest Comparison
Advanced Metrics
Key Insights
Interest Tips
- • Compound interest grows exponentially over time
- • More frequent compounding increases returns
- • Start investing early to maximize compound growth
- • Regular deposits can significantly boost returns
- • Consider tax implications on investment gains
How it works
An interest calculator works out what a balance earns or costs over time. Simple interest applies the rate only to the original principal; compound interest applies it to the growing balance, so interest itself earns interest.
Simple vs compound
Simple: I = P · r · t Compound: A = P · (1 + r/m)^(m·t)
- P
- principal
- r
- annual rate (decimal)
- t
- years
- m
- compounding periods per year
Worked example
- P = $1,000, r = 5%, t = 3 years
- Compare simple vs annual compounding
- Simple: 1,000 × 0.05 × 3 = $150
- Compound: 1,000 × 1.05³ − 1,000 ≈ $158
Simple = $150 interest; compounding annually earns ~$158.
Good to know
- Over long horizons the gap between simple and compound interest grows dramatically.
- More frequent compounding (monthly vs annual) raises the total, but only modestly.
- For borrowing, compound interest works against you — pay it down before it snowballs.
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Frequently Asked Questions
What's the difference between simple and compound interest?
Simple interest is earned only on the original principal, so growth is linear. Compound interest is earned on principal plus previously earned interest, so growth accelerates over time — the longer the horizon, the bigger the gap between the two.
What formula does compound interest use?
A = P(1 + r/n)^(nt), where P is principal, r the annual rate, n the compounding periods per year, and t the years. $10,000 at 5% compounded monthly for 10 years grows to about $16,470.
What is the Rule of 72?
Divide 72 by the annual return to estimate the years needed to double your money: at 8%, about 9 years; at 6%, about 12. It's an approximation that works well for rates roughly between 4% and 12%.
How much does compounding frequency matter?
More frequent compounding helps, but with diminishing returns: 5% compounded annually yields exactly 5%, monthly about 5.12%, and daily about 5.13%. The rate itself and the time invested matter far more than the compounding schedule.
Why does starting early matter so much?
Compounding rewards time exponentially. At 7%, money doubles roughly every decade — so a dollar invested at 25 doubles about four times by 65, while the same dollar invested at 45 doubles only twice. Early contributions do disproportionate work.