Interest Calculator
Calculate simple or compound interest on a principal amount. A free online interest calculator showing the interest earned and the total, with no sign-up required.
Enter a principal, rate, and time period to see interest earned either way — useful for comparing a savings account's compound growth against a simple-interest loan or deposit. Compound mode also shows the effective annual rate, which is what lets you compare two offers that compound at different frequencies.
How to calculate compound interest
- Choose simple or compound. Pick Compound Interest for savings, fixed deposits, and most investments. Simple Interest applies to some short-term loans and bonds where interest never earns interest.
- Enter principal, rate, and time. Type the starting amount, the annual interest rate, and how many years it runs for.
- Set the compounding frequency. In compound mode, choose whether interest is added annually, semi-annually, quarterly, or monthly. The more often it compounds, the more it earns.
- Compare the effective annual rate. The result shows the interest earned, the maturity amount, and — in compound mode — the effective annual rate, which is the figure to compare two offers by.
The interest formulas
Simple interest is P × r × t ÷ 100 — the principal, the annual rate, and the number of years. The interest is the same every year because it is always charged on the original amount. A principal of 100,000 at 8% for 5 years earns 40,000.
Compound interest is P × (1 + r ÷ n)n×t− P, where n is how many times a year interest is added. Each period's interest joins the principal and earns interest itself, so the same 100,000 at 8% compounded annually earns about 46,933 over 5 years — nearly 7,000 more than simple interest, from an identical rate.
That gap widens sharply with time, because the interest being re-invested is itself larger every year. Over one or two years simple and compound barely differ; over decades the difference dominates the result. The same logic applies to the compounding frequency, which is why the effective annual rate — not the quoted rate — is the figure to compare two offers by.
Frequently asked questions
What's the difference between simple and compound interest?
Simple interest is calculated only on the original principal each period. Compound interest is calculated on the principal plus any interest already earned, so it grows faster over time.
Can I set how often interest compounds?
Yes. Compound mode offers annual, semi-annual, quarterly, and monthly compounding. Pick the one your bank or deposit actually uses — it varies by country and by product. Fixed and term deposits commonly compound quarterly, US savings accounts and CDs usually compound monthly or daily, and the figure is always stated in the product's terms.
What do I need to enter to calculate interest?
Three figures: the principal, the annual interest rate, and the number of years. In compound mode there is a fourth choice, the compounding frequency. The interest earned and the maturity amount appear as soon as all three are filled in.
What is the effective annual rate, and why does it differ from the quoted rate?
The effective annual rate is what a quoted rate actually works out to once compounding is counted. 10% compounded monthly earns about 10.47% over a year, because each month's interest starts earning interest itself. It's the only fair way to compare two offers with different compounding frequencies.
Does more frequent compounding always earn more?
Yes, but with diminishing returns. At a 10% rate, annual compounding gives 10%, quarterly about 10.38%, and monthly about 10.47%. The gap between monthly and daily is very small, so a slightly higher rate usually beats more frequent compounding.
Is this the right calculator for a recurring deposit or SIP?
No. This calculates growth on a single lump sum. A recurring deposit or SIP adds a fresh contribution every period, so each instalment compounds for a different length of time and needs a different formula.