Interest Calculator
Calculate compound or simple interest for loans, investments, and savings
Understanding Interest Calculations
Compound Interest
Compound interest is calculated on the initial principal and also on the accumulated interest of previous periods. It's commonly used for savings accounts and investments where interest is reinvested.
Formula: A = P × (1 + r/n)nt
- A = the future value of the investment/loan
- P = principal investment amount
- r = annual interest rate (decimal)
- n = number of times interest is compounded per year
- t = time the money is invested/borrowed for, in years
Simple Interest
Simple interest is calculated only on the principal amount, or on that portion of the principal amount which remains unpaid. It's typically used for short-term loans.
Formula: A = P × (1 + rt)
- A = total accrued amount
- P = principal amount
- r = annual interest rate (decimal)
- t = time in years
Tip: The more frequently interest is compounded, the greater the total amount will be. Daily compounding will yield more than monthly, which yields more than annual compounding.