Interest Calculator
Calculate simple or compound interest on a deposit or loan balance, with optional monthly contributions. Example: $10,000 at 5% compounded monthly for 10 years grows to $16,470.09, which is $6,470.09 of interest.
Show steps
How to use the Interest Calculator
- Enter your starting amount, the annual rate and the number of years.
- Choose simple interest or how often interest compounds, and add a monthly contribution if you save regularly.
- Press Calculate to see total interest, the final balance and a year-by-year table.
Formula and method
Simple interest: I = P × r × t. Compound interest: A = P × (1 + r/n)nt, where P is the starting amount, r the annual rate as a decimal, n the compounding periods per year and t the years. With monthly contributions the balance is rolled forward month by month, which matches the future value of an annuity.
Simple vs compound interest: $10,000 at 5% for 10 years
| Method | Final balance | Interest |
|---|---|---|
| Simple interest | $15,000.00 | $5,000.00 |
| Compounded annually | $16,288.95 | $6,288.95 |
| Compounded quarterly | $16,436.19 | $6,436.19 |
| Compounded monthly | $16,470.09 | $6,470.09 |
| Compounded daily | $16,486.65 | $6,486.65 |
More frequent compounding adds a little, but the rate and the time matter far more than the frequency.
The rule of 72
To estimate how long money takes to double, divide 72 by the annual rate in percent. At 6% it takes about 12 years (72 / 6), and at 8% about 9 years. It is an approximation that works best between 4% and 12%.
Where each type of interest is used
Savings accounts, CDs and bonds compound interest in your favor. Credit cards and many loans compound against you, which is why a balance grows quickly when only minimums are paid. Many auto loans and short-term notes use simple interest. For deeper projections use the compound interest calculator, the simple interest calculator or the savings calculator.
How much interest will common balances earn in one year? (4% compounded monthly)
| Balance | Interest after 1 year | Balance after 1 year |
|---|---|---|
| $1,000 | $40.74 | $1,040.74 |
| $5,000 | $203.71 | $5,203.71 |
| $10,000 | $407.42 | $10,407.42 |
| $50,000 | $2,037.08 | $52,037.08 |
| $100,000 | $4,074.15 | $104,074.15 |
| $1,000,000 | $40,741.54 | $1,040,741.54 |
At 4% compounded monthly the effective yield is 4.074%, which is why $100,000 earns $4,074.15 in a year, slightly more than 4% of the balance.
How much to save each month to reach a goal (5% compounded monthly)
| Goal | In 10 years | In 20 years | In 30 years |
|---|---|---|---|
| $10,000 | $64 | $24 | $12 |
| $100,000 | $644 | $243 | $120 |
| $1,000,000 | $6,440 | $2,433 | $1,202 |
Time does most of the work: a $100,000 goal needs about $644 a month over 10 years but only $120 a month over 30 years, because interest compounds on more money for longer.
APR vs APY
APR (annual percentage rate) is the stated yearly rate without compounding. APY (annual percentage yield) includes compounding, so it is higher whenever interest compounds more than once a year. A 5% rate compounded monthly has a 5.116% APY. When you compare savings accounts, compare APY; when you compare loans, compare APR. The calculator shows the effective annual yield for your inputs.
Interest on savings vs interest on debt
The same math works against you on debt. A credit card balance of $5,000 at a 24% APR compounded monthly grows to $6,341.21 after a year if nothing is paid, which is $1,341.21 of interest. Paying more than the minimum early cuts the amount that compounds. For loan payments and payoff dates use the loan calculator.
Frequently asked questions
How do you calculate interest?
Simple interest is principal x rate x time. Compound interest multiplies the balance by (1 + rate / n) for each of the n periods every year.
What is the difference between simple and compound interest?
Simple interest is earned on the original amount only. Compound interest is earned on the original amount plus interest already added.
How much is $10,000 at 5% for 10 years?
$15,000 with simple interest, or $16,470.09 compounded monthly.
How much interest will $100,000 earn in a year?
At 4% compounded monthly, $4,074.15. At 5% compounded monthly, $5,116.19. Multiply your balance by the rate for a quick estimate.
How much interest will $1,000 earn?
At 4% for one year compounded monthly, $40.74. Over 10 years it grows to $1,490.83.
What is the difference between APR and APY?
APR is the rate without compounding. APY includes compounding, so it shows what you actually earn in a year.
Does compounding frequency matter?
A little. Moving from annual to daily compounding adds about 0.13 percentage points at 5%, while the rate and the time matter far more.
What is the rule of 72?
Divide 72 by the interest rate to estimate the years it takes to double your money: at 6% about 12 years.
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