Interest Calculator

Calculate simple and compound interest for your investments and loans

S
Simple Interest
C
Compound Interest
Years
Months
Days

Calculate simple interest on $1000 at 5% for 1 year(s).

Calculation Result

Simple interest on $1,000.00 at 5% for 1 year: $50.00

Solution Steps:

1. Formula: Simple Interest = Principal × Rate × Time
2. Convert rate to decimal: 5% = 5/100 = 0.05
3. Calculate: 1000 × 0.05 × 1 = 50
4. Total Amount = Principal + Interest = 1000 + 50 = 1050
Total Amount
$1,050.00
Interest Earned
$50.00
Annual Percentage Yield
5.00%
Effective Annual Rate
5.00%

Quick Calculations

Calculation History

Date Calculation Result

Interest Calculator Introduction

The Interest Calculator helps you calculate simple and compound interest for various financial scenarios including savings, investments, and loans.

How Interest Calculation Works

Interest is the cost of borrowing money or the return on investment for lending money. The calculator uses established financial formulas to provide accurate results for both simple and compound interest.

Why Use an Interest Calculator?

An interest calculator helps you:

  • Plan your savings and investments
  • Compare different loan options
  • Understand the power of compound interest
  • Make informed financial decisions
  • Calculate returns on various investment products

Interest Calculation Types

Simple Interest

  • Calculated only on the principal amount
  • Formula: I = P × R × T
  • Example: $1000 at 5% for 1 year = $50

Compound Interest

  • Calculated on principal + accumulated interest
  • Formula: A = P(1 + r/n)^(nt)
  • Example: $1000 at 5% compounded monthly for 1 year = $1051.16

APY vs APR

  • APY includes compounding effects
  • APR is the simple annual rate
  • APY is always higher than APR

Effective Annual Rate

  • The actual annual rate with compounding
  • Formula: EAR = (1 + i/n)^n - 1
  • Used to compare different compounding periods

Common Interest Operations

This calculator performs various interest operations:

  • Simple Interest: Calculates interest on the principal only
  • Compound Interest: Calculates interest on principal plus accumulated interest
  • Total Amount: Calculates the final amount including principal and interest
  • Effective Rate: Calculates the true annual rate with compounding

Interest Formulas and Methods

The calculator applies fundamental interest formulas:

  • Simple Interest: I = P × R × T
  • Compound Interest: A = P(1 + r/n)^(nt)
  • Total Amount: A = P + I (for simple interest)
  • Effective Annual Rate: EAR = (1 + i/n)^n - 1
  • Annual Percentage Yield: APY = (1 + r/n)^n - 1

Tips for Using the Interest Calculator

  • Use decimal points for precise interest rates
  • Select the appropriate calculation type for your needs
  • For loans, use compound interest with appropriate compounding frequency
  • For savings, consider the power of compound interest over time
  • Use the quick calculation buttons for common scenarios

Limitations of Interest Calculators

While interest calculators are useful tools, they have limitations:

  • Results are based on fixed rates and may not reflect variable rates
  • They don't account for fees, taxes, or inflation
  • Actual financial products may have different terms and conditions
  • For complex financial scenarios, consult a financial advisor