Calculate simple and compound interest with precision using our free online interest calculator. Understand how your money grows over time with clear explanations, step-by-step results, and visual comparisons.
Total Interest
$0
Final Amount
$0
Enter your values and click "Calculate Interest" to see results
Understanding how interest accumulates helps you make smarter financial choices when saving, investing, or borrowing.
Simple interest is calculated only on the original principal amount throughout the entire time period.
Formula:SI = P × R × T / 100
Compound interest is calculated on both the principal and the accumulated interest, creating exponential growth over time.
Formula:A = P(1 + r/n)ⁿᵗ
Principal: $10,000 | Rate: 5% | Time: 5 years
Interest: $2,500
Total: $12,500
Principal: $10,000 | Rate: 5% | Time: 5 years
Interest: $2,763
Total: $12,763
Difference: Compound interest earns $263 more than simple interest in this example!
This calculator handles both simple and compound interest and adds an inflation-adjustment layer for real-return analysis. Here is how to use each field:
Choose Simple for bonds, short-term loans, or basic interest calculations. Choose Compound for savings accounts, CDs, mortgages, and investment projections. Compound interest grows faster because each period’s interest earns interest in the next period.
Enter the starting amount in Principal (your deposit or loan balance). Enter the Annual Interest Rate as a percentage (e.g., 5.5 for 5.5%). For time, enter years and optionally extra months (e.g., 3 years + 6 months = 3 years 6 months). Fractions of years are handled automatically.
Optional. Enter the expected annual inflation rate (e.g., 2.5 for 2.5%). The calculator uses the Fisher equation to compute your real rate of return: real rate ≈ (nominal − inflation) ÷ (1 + inflation/100). The Final Amount displayed reflects inflation-adjusted purchasing power — what your money is truly worth in today’s dollars.
Choose how often interest is added to your balance. Monthly is standard for savings accounts and CDs. Daily is used by many HYSAs and credit cards. Annually is typical for bonds. More frequent compounding earns slightly more — see the comparison table in the Formula section below.
The total interest earned (savings) or owed (loan) over the full time period. For simple interest this is fixed. For compound interest, it accelerates — each period earns interest on a growing base. This is the gross interest before any inflation adjustment.
Your projected balance at the end of the time period, adjusted for inflation using the real rate of return. If you entered 0% inflation, this equals Principal + Total Interest. With inflation entered, this shows what that future amount is worth in today’s dollars — your real purchasing power.
APR (Annual Percentage Rate) is the stated nominal rate before compounding. APY (Annual Percentage Yield) includes the effect of compounding and is the actual yearly return you earn or pay. Banks advertise savings accounts by APY (higher number). Loans use APR (misleadingly lower).
APY = (1 + APR/n)^n − 1
Example: 5% APR compounded monthly → APY = (1 + 0.05/12)^12 − 1 = 5.116%
Enter the APR in the Rate field for formula-exact results. Enter the APY if you want results that match what your bank statement shows. Always compare APY to APY when evaluating different accounts.
A 5% savings rate sounds good, but if inflation runs at 2.5%, your real return is only about 2.44%. The calculator uses the Fisher equation: Real Rate ≈ (Nominal − Inflation) ÷ (1 + Inflation/100). Over 10 years at 5% nominal with 2.5% inflation, $10,000 becomes $16,470 nominally but only about $12,801 in real (inflation-adjusted) terms.
| Scenario | Nominal Return | Real Return |
|---|---|---|
| HYSA at 4.5%, inflation 2.5% | 4.5% | ~1.95% |
| Index fund at 10%, inflation 3% | 10% | ~6.8% |
| Bond at 3%, inflation 3% | 3% | ~0% |
| Traditional savings 0.5%, inflation 2.5% | 0.5% | −1.95% |
Both formulas are straightforward. Simple interest is linear; compound interest is exponential. Here are both with full worked examples.
Simple Interest: SI = P × R × T ÷ 100
Compound Interest: A = P(1 + r/n)^(n×t)
Effective Annual Rate: EAR = (1 + r/n)^n − 1
Fisher Equation (Real Rate): real ≈ (nominal − inflation) ÷ (1 + inflation/100)
Where: P = principal, R = rate %, T = years, r = annual rate (decimal), n = periods per year, t = years.
Scenario: You deposit $15,000 at 5% APR for 7 years. Inflation = 2.5%. Compare simple vs. compound (monthly) interest.
Monthly compounding earns $1,117 more than simple interest on this $15,000 deposit over 7 years. After inflation, real gains are modest but still positive.
$10,000 at 5% for 10 years, no additional contributions.
| Frequency | n / Year | Final Amount | Interest Earned |
|---|---|---|---|
| Annually | 1 | $16,288.95 | $6,288.95 |
| Quarterly | 4 | $16,436.19 | $6,436.19 |
| Monthly | 12 | $16,470.09 | $6,470.09 |
| Daily | 365 | $16,486.65 | $6,486.65 |
Monthly compounding earns $181 more than annual on $10,000. The gap is real but diminishes quickly beyond monthly. Most high-yield savings accounts and credit cards compound daily.
Select Compound Interest, enter your deposit as Principal, your HYSA’s APY as Rate, select Daily or Monthly frequency. Current HYSAs offer 4.5–5.5% APY (2024–2025). Example: $20,000 at 4.8% daily compounding for 5 years → $25,343 final amount and $5,343 in interest — versus $4,800 with simple interest. The $543 compound advantage grows larger over longer periods.
CDs lock in a fixed rate. Select Compound Interest, enter the CD APY, select Monthly or Daily. Leave inflation blank for nominal projections. A $10,000 CD at 5.1% monthly compounding for 12 months → $10,520.91 final amount ($520.91 interest). Compare to a 0.5% traditional savings account: only $50 interest on the same $10,000 for one year.
For personal loans and auto loans that use simple interest, select Simple Interest. Enter the loan amount as Principal. Example: $12,000 auto loan at 7.5% simple interest for 3 years → Interest = $12,000 × 7.5 × 3 ÷ 100 = $2,700 total interest. Total repayment = $14,700. This is the true cost of borrowing before any fees.
Credit cards compound daily at 18–29% APR. Select Compound Interest, enter your balance as Principal, the APR as Rate, select Daily frequency. A $5,000 balance at 24% APR for 3 years with no payments → $10,183 final balance ($5,183 in interest). This illustrates why carrying a credit card balance is costly compared to any savings rate available.
For stock market projections, use Compound Interest with Annual frequency. Use 7% as a conservative real after-inflation return for diversified index funds historically. Example: $25,000 at 7% annually for 20 years → $96,742 final amount. Compare this to keeping $25,000 in a traditional 0.5% savings account: only $27,564. The $69,178 difference is the opportunity cost of not investing.
US Treasury bonds and corporate bonds pay a fixed coupon based on simple interest. Select Simple Interest. Example: $50,000 Treasury bond at 4.25% coupon for 10 years → Annual interest = $2,125/year → Total interest = $21,250 over 10 years. The final amount at maturity is $71,250. Note: bond market value fluctuates, but this shows the income component.
Choosing the right rate input makes your projections accurate. Here are current benchmarks and how compound interest works in debt situations.
| Financial Product | Typical Rate | Interest Type |
|---|---|---|
| High-Yield Savings (HYSA) | 4.5–5.5% APY | Compound (daily) |
| CD (1–2 year) | 4.5–5.1% APY | Compound (monthly) |
| Traditional Savings | 0.01–0.5% APY | Compound (daily) |
| US Treasury Bond (10yr) | ~4.0–4.5% | Simple (coupon) |
| S&P 500 Index Fund (historical) | ~10% nominal / 7% real | Compound (annual) |
| Credit Card | 18–29% APR | Compound (daily) |
| Auto Loan | 6–9% APR | Simple interest |
| Personal Loan | 8–20% APR | Simple interest |
Rates as of early 2025. Verify current rates with your financial institution before projecting.
A $5,000 credit card balance at 24% APR compounding daily: with no payments, the balance grows to $6,360 in 1 year and $16,119 in 5 years. The Rule of 72 (72 ÷ 24 = 3) confirms debt doubles every 3 years at 24% APR. Even minimum payments barely outpace the daily compounding.
A $350,000 mortgage at 6.5% APR compounded monthly over 30 years generates approximately $438,000 in total interest — more than the original loan amount. In the early years, nearly 80% of each monthly payment goes to interest, not principal. Use this calculator to see how different rates change the total interest cost.
California’s usury law (Article XV of the state constitution) caps non-exempt consumer loan interest at 10% per year for most non-bank lenders. However, banks, credit unions, and licensed lenders are exempt from this cap — which is why credit card APRs can exceed 20% even in California. When modeling loan interest in CA, verify whether your lender is exempt before assuming rate caps apply.
EAR = (1 + r/n)^n − 1. Converts any nominal rate to its true annual equivalent, accounting for compounding. A 12% APR compounded monthly has an EAR of (1 + 0.12/12)^12 − 1 = 12.68% EAR. Use EAR to compare loans or investments with different compounding frequencies on an apples-to-apples basis.
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Simple interest is calculated only on the original principal: SI = P × R × T / 100. Compound interest is calculated on principal plus accumulated interest each period: A = P(1 + r/n)^(nt). On $10,000 at 5% for 5 years: simple = $2,500 interest; compound (annual) = $2,763 interest. At 20 years, simple interest earns $10,000 while compound earns $16,533 — a 65% difference.
SI = P × R × T ÷ 100. P = principal, R = annual rate %, T = years. Example: $8,000 at 6% for 4 years: SI = 8,000 × 6 × 4 ÷ 100 = $1,920 interest. Final amount = $9,920. Simple interest is linear — each year adds the exact same fixed amount, regardless of accumulated interest.
Use A = P(1 + r/n)^(nt). Example: $10,000 at 5% compounded monthly for 3 years: A = 10,000 × (1 + 0.05/12)^36 = 10,000 × (1.004167)^36 = $11,614.72. Total interest = $1,614.72. For daily compounding at the same inputs, use n=365: A = 10,000 × (1 + 0.05/365)^1095 = $11,618.22.
APR (Annual Percentage Rate) is the nominal rate without compounding. APY (Annual Percentage Yield) includes compounding: APY = (1 + APR/n)^n − 1. A 5% APR compounded monthly has APY = 5.116%. Banks show savings accounts as APY (higher), loans as APR (lower). Always compare APY to APY when evaluating accounts. Enter APR in the Rate field for formula-exact calculations.
Compounding frequency (n) is how often interest is added to your balance. Annual (n=1): common for bonds. Quarterly (n=4): some CDs. Monthly (n=12): savings accounts and mortgages. Daily (n=365): HYSAs and credit cards. More frequent compounding earns slightly more. On $10,000 at 5% for 10 years: annual = $16,289, monthly = $16,470, daily = $16,487.
Set n=365 in the formula: A = P(1 + r/365)^(365t). Example: $10,000 at 5% daily for 10 years: A = 10,000 × (1.000136986)^3650 = $16,487.21. Most HYSAs and all major credit card issuers compound daily. On credit cards, this means your unpaid balance grows every single day, making it critical to pay more than the minimum.
Compound interest is always better for savers. $10,000 at 7% for 30 years: simple = $31,000 total; compound (annual) = $76,123 total — nearly 2.5 times more. As a borrower, simple interest loans cost you less because you only pay interest on the original balance, not on accumulated interest. Prefer simple interest loans and compound interest savings.
The inflation field adjusts results to show real purchasing power using the Fisher equation: real rate ≈ (nominal − inflation) ÷ (1 + inflation/100). At 5% rate and 2.5% inflation, your real rate ≈ 2.44%. The Final Amount shown reflects inflation-adjusted returns. If nominal is 4.5% and inflation is 4.5%, your real rate is 0% — you preserved purchasing power but earned nothing real.
Current benchmarks (2025): HYSAs offer 4.5–5.5% APY. CDs (1–2 year) 4.5–5.1% APY. Traditional savings accounts 0.01–0.5% APY. US Treasury bonds ~4–4.5%. S&P 500 index funds ~10% nominal / ~7% real historically. Credit cards 18–29% APR. Auto loans 6–9% APR. Use these as realistic inputs to project outcomes for your specific situation.
Credit card debt compounds daily at 18–29% APR. A $5,000 balance at 24% APR with no payments grows to $6,360 in one year and $16,119 in five years. The Rule of 72 (72 ÷ 24 = 3) confirms debt doubles every 3 years. Model this in the calculator: enter your balance as Principal, 24 as Rate, Daily frequency, and set time to 5 years.