Interest Calculator: Simple and Compound
By Hesaplayıcı
The interest calculator shows how much a principal grows to with simple or compound interest. Enter the principal, the interest rate, the period of the rate and the term; for compound interest, also choose how often interest is added. You get the final amount, total interest, nominal and effective annual rates and yearly and monthly balances.
Worked example: 10,000 at 10% a year, compounded monthly, for 5 years
Final amount
16,453.09
- Total interest
- 6,453.09
- Nominal annual rate
- 10.00%
- Effective annual rate
- 10.47%
- Term
- 5 years
Step by step
Nominal annual rate
r = rate × periods per year
r = 10% × 1 = 10.00%
Term
t = years + months/12 + weeks/52 + days/365
t = 5 + 0/12 + 0/52 + 0/365 = 5 years
Final amount
A = P × (1 + r/n)^(n × t)
A = 10,000 × (1 + 10%/12)^(12 × 5) = 16,453.09
Effective annual rate
e = (1 + r/n)^n − 1
e = (1 + 10%/12)^12 − 1 = 10.47%
How to use
- Choose the interest type: simple or compound.
- Enter the principal.
- Enter the interest rate and choose its period: yearly, monthly, weekly or daily.
- Enter the Term and choose its unit: years, months, weeks or days.
- For compound interest, choose the compounding frequency.
- Press Calculate.
Formula
Simple interest uses A = P × (1 + r × t) and compound interest uses A = P × (1 + r/n)^(n × t). A is the final amount, P the principal, r the nominal annual rate as a decimal, n the number of compounding periods per year and t the term in years.
With compound interest, the effective annual rate is (1 + r/n)^n − 1. With simple interest, the effective rate equals the nominal rate.
Worked example
The worked example on this page runs the calculator’s first example step by step: the rate becomes a yearly rate, the term becomes years, and the formula gives the final amount. When you calculate with your own values, the same steps appear in the result.
Limits
The calculator does not deduct tax, withholding or fees; it shows gross interest. It does not calculate loan payments or an annual percentage rate. The rate stays the same for the whole term; variable rates are not supported.
Frequently Asked Questions
What is simple interest?
Simple interest is calculated on the principal only. Interest does not earn interest, so every year earns the same amount. The formula is Interest = Principal × Rate × Time.
What is compound interest?
Compound interest is calculated on the principal and on the interest added in earlier periods. Because interest is added to the balance at the end of each period, the balance grows faster than with simple interest.
What is the difference between simple and compound interest?
With simple interest only the principal earns interest; with compound interest the added interest earns interest too. At the same rate and term, compound interest gives a higher amount when the term is longer than one compounding period.
Calculation rules
- Simple interest applies to the principal only: A = P × (1 + r × t).
- Compound interest is added to the balance at the end of each period: A = P × (1 + r/n)^(n × t). A partial last period uses a fractional exponent.
- A monthly rate is multiplied by 12, a weekly rate by 52 and a daily rate by 365 to get the nominal annual rate.
- In the term, 1 month is 1/12 year, 1 week is 1/52 year and 1 day is 1/365 year. The term is at most 100 years.
- Results are not rounded. The monthly breakdown has at most 1,200 rows.