Interest Calculator

An interest calculator helps you understand how interest accumulates over time. This interest calculator supports both simple and compound interest calculations, allowing you to see the significant difference between the two methods. Use this interest calculator to plan savings, evaluate investments, or understand loan interest.

Key interest calculator concepts:

• Simple Interest: Calculated only on the principal amount (I = P × r × t). Simple interest does not compound, so interest is always calculated on the original principal.
• Compound Interest: Interest calculated on both the principal and accumulated interest. The formula is A = P(1 + r/n)^(nt), where n is the compounding frequency.
• Compounding Frequency: How often interest is calculated and added to the principal. More frequent compounding (daily vs. annually) results in higher returns.
• Effective Annual Rate (EAR): The actual annual rate of return when accounting for compounding. This interest calculator shows how EAR differs from the nominal rate.
• Rule of 72: A quick way to estimate doubling time. Divide 72 by your interest rate to find approximate years to double your money (e.g., at 6%, money doubles in ~12 years).

Using this interest calculator: Enter your principal amount, interest rate, and time period. Choose between simple or compound interest, and for compound interest, select your compounding frequency. Add optional regular contributions to see how systematic investing grows your wealth. This interest calculator displays both simple and compound interest side-by-side, showing the power of compounding over time.