Work out interest in seconds. This free interest calculator handles both simple and compound interest — enter your principal, rate and time to see how much you’ll earn and your final balance.
Results update automatically as you type. Compound interest is compounded annually.
How the Interest Calculator Works
An interest calculator shows how a lump sum grows over time, whether interest is paid flat on the original amount or compounds year after year. Enter your principal, annual rate, and time period, and switch between simple and compound to compare the two.
Formula: Simple interest — I = P × r × t, Final Balance = P + I. Compound interest (compounded annually) — Final Balance = P × (1 + r)^t, I = Final Balance − P
- P — the principal amount you start with
- r — the annual interest rate, entered as a percentage
- t — the time period in years
- I — the interest earned over that period, shown separately from the final balance
Example Scenarios
| Principal | Annual Rate | Years | Type | Final Balance |
|---|---|---|---|---|
| $10,000 | 5% | 10 | Simple | $15,000 |
| $10,000 | 5% | 10 | Compound | $16,289 |
| $5,000 | 4% | 5 | Simple | $6,000 |
| $5,000 | 4% | 5 | Compound | $6,083 |
| $20,000 | 6% | 20 | Compound | $64,143 |
| $1,000 | 3% | 1 | Simple | $1,030 |
Interest Calculator FAQ
What’s the real difference between simple and compound interest?
Simple interest is calculated only on your original principal every year, so it grows at a flat rate. Compound interest is calculated on your growing balance, including interest already earned, so it accelerates the longer you leave the money in.How much difference does compounding actually make over 10 years?
On $10,000 at 5% for 10 years, simple interest gives you $15,000, while annual compounding gives you about $16,289. The gap widens the longer the time period and the higher the rate.Does this calculator compound monthly or daily?
No, the compound option here compounds annually, once per year. If your account compounds monthly or daily, the actual balance will be slightly higher than what this calculator shows for the same stated annual rate.Can I use this for a loan instead of savings?
The math works the same way for interest owed on a loan as for interest earned on savings — it’s the same formulas. Just treat the principal as the amount borrowed rather than the amount deposited.Why does my interest earned look small for short time periods?
Interest scales with both rate and time, so a low rate over just one or two years produces a small dollar amount even on a large principal. Longer time periods or higher rates are needed for interest to add up meaningfully.What happens if I enter 0 for the time period?
The calculator won’t produce a result — it needs a principal, rate, and a time period greater than zero to run the calculation, since zero years means no interest has had a chance to accrue.Related Calculators
For a deeper look at how compounding builds wealth over long stretches of time, try the tool to model compound interest with regular contributions. If you’re comparing the annual growth rate of an investment across years, the CAGR calculator is built for that, and to work backward from a target balance you can use the interest rate calculator.