Interest Calculator
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What Your Result Means
- Total Amount: Your principal plus all interest earned over the specified period. This is what your investment or deposit would be worth at the end of the term, assuming no withdrawals or additional contributions.
- Interest Earned: The difference between the total amount and your original principal — pure earnings from the interest rate applied over time.
- Effective Annual Rate: The annualized rate of return based on total interest earned. For simple interest this equals the stated rate; for compound interest it is higher because each compounding period adds to the base that earns future interest.
How This Calculator Works
You enter a principal amount, annual interest rate, time period (in years, months, or days), and choose simple or compound interest. Simple interest uses A = P(1 + rt), where interest is earned only on the original principal. Compound interest uses A = P(1 + r/n)^(nt), where n is the compounding frequency — each period's interest is added to the principal so future periods earn interest on interest. The tool converts all time inputs to years internally before computing.
Quick Questions
What is the difference between simple and compound interest?
Simple interest is calculated only on the original principal — it grows linearly. Compound interest adds each period's earnings back into the principal, so you earn interest on interest. Over time, compounding produces significantly more growth, especially at higher rates and longer periods.
How does compounding frequency matter?
More frequent compounding earns slightly more interest. At 5% on $10,000 for 10 years, annual compounding yields about $16,289 while daily compounding yields about $16,487 — a difference of roughly $198. The effect is more pronounced at higher rates and longer periods.
What is APY vs APR?
APR (Annual Percentage Rate) is the stated rate without compounding. APY (Annual Percentage Yield) includes the effect of compounding and is always equal to or higher than APR. Banks advertise savings APY (which looks bigger) and loan APR (which looks smaller).
Does this account for taxes on interest?
No. Interest income is generally taxable at your ordinary income tax rate. The amounts shown here are gross (pre-tax). Your actual net return will be lower once federal and state income taxes are applied to the interest earned.
Sources
- SEC Investor.gov — Understanding Interest (simple vs. compound interest fundamentals)
- Federal Reserve H.15 — Selected Interest Rates (benchmark rate data)
- FDIC National Rates and Rate Caps (current average savings and CD rates)
Method & review
Estimate only. Results reflect your inputs and standard formulas. Double-check important decisions independently.