Interest Calculator
Calculate simple or compound interest on any amount.
Principal ($)
Annual rate (%)
Years
Final amount
$11,500.00
Interest earned
$1,500.00
Gain
15.0%
Growth over time
Yr 1
Yr 2
Yr 3
PrincipalInterest
Simple vs. compound interest
The same numbers, two very different outcomes over time.
Simple interest is calculated exclusively on the original principal — it grows in a straight line. Borrow $10,000 at 5% simple interest for 10 years and you owe exactly $5,000 in interest, no more. This predictability makes it common in personal loans, car financing, and some bonds.
Compound interest recalculates on the total balance at the end of each period — principal plus previously earned interest. The same $10,000 at 5% compounded annually for 10 years produces $6,289 in interest, and the gap widens dramatically as the period lengthens. At 20 years, compound interest produces $16,533 vs. $10,000 from simple interest. Albert Einstein reportedly called compound interest the eighth wonder of the world — whether or not he actually said it, the math makes the point.
The practical implication: for savings and investments, always seek compound interest. For loans and debt, compound interest works against you — a 20% credit card that compounds daily is far more expensive than its headline rate suggests.
Compound interest recalculates on the total balance at the end of each period — principal plus previously earned interest. The same $10,000 at 5% compounded annually for 10 years produces $6,289 in interest, and the gap widens dramatically as the period lengthens. At 20 years, compound interest produces $16,533 vs. $10,000 from simple interest. Albert Einstein reportedly called compound interest the eighth wonder of the world — whether or not he actually said it, the math makes the point.
The practical implication: for savings and investments, always seek compound interest. For loans and debt, compound interest works against you — a 20% credit card that compounds daily is far more expensive than its headline rate suggests.
Simple interest
$11,500.00
+$1,500.00 interest
Compound interest
$11,576.25
+$1,576.25 interest
Difference over 3 years: $76.25 extra with compounding.
Does compounding frequency matter?
How much extra you earn by compounding more frequently at your current rate and principal.
At typical savings rates, frequency adds very little. Rate matters far more than how often it compounds.
The Rule of 72
A quick mental shortcut to estimate how long it takes to double your money.
Years to double ≈ 72 ÷ annual rate
At 5% → doubles in roughly 14.4 years
At 5% → doubles in roughly 14.4 years
Frequently asked questions
What this tool does
Calculates both simple interest (interest on the original amount only) and compound interest (interest on interest). Compare both modes side by side to see why compounding matters so much over time.
Input fields explained
Principal
The starting amount — the money you are saving or the debt you owe.
Annual rate
The yearly interest rate as a percentage. Savings accounts: 3–5%. Credit cards: 15–25%. Mortgages: 4–7%.
Years
The duration in years. Compound interest becomes dramatically more powerful after 10–20+ years.
Formula / How it works
Simple interest: A = P × (1 + r×t) Compound interest: A = P × (1 + r)^t Compound interest grows faster because interest earns interest.