Interest calculator

Simple interest vs. compound interest

Simple interest is calculated only on the original amount you deposit or borrow — the principal. It grows in a straight line every year because the interest earned in year one never earns interest itself. Compound interest, on the other hand, is calculated on the principal plus whatever interest has already been added, so the balance grows faster the longer you leave it, especially once compounding happens monthly or daily rather than just once a year.

This is why long-term savers usually care so much about compounding frequency. A 6% annual rate compounded monthly will always produce a slightly higher final balance than the same 6% compounded just once a year, because interest is being added to the pot — and starting to earn its own interest — twelve times instead of one.

The formulas this calculator uses

For simple interest, the calculator uses:

• Simple interest = P × r × t, where P is the principal, r is the annual rate as a decimal, and t is the time in years.

For compound interest, it uses the standard compound interest formula, extended to account for regular contributions added at the end of each period:

• A = P × (1 + r/n)^(n×t), where n is the number of times interest compounds per year.
• Each regular contribution is then grown for the remaining number of periods it has left to compound, and all of those amounts are added together to get the final balance.

A worked example

Say you deposit $10,000 at a 6% annual rate for 5 years, compounded monthly, with no extra contributions. Interest is applied 60 times over the 5 years at a rate of 0.5% per month. By the end, the balance grows to roughly $13,489 — meaning you've earned about $3,489 in interest without adding another dollar of your own money.

Now add a $100 monthly contribution to that same scenario. Each deposit gets less time to compound than the one before it, but together they add up quickly — pushing the total balance to roughly $20,465 by year five: your original $10,000, $6,000 in contributions, and about $4,465 in combined interest.

Things to keep in mind

Factor	Effect on your balance
Higher compounding frequency	Slightly higher final balance for the same rate
Longer time period	Much larger effect than a higher rate, thanks to compounding
Regular contributions	Can outweigh interest earned, especially in early years
Inflation	Not included here — real purchasing power grows more slowly

This calculator is meant for estimating growth on savings or investments — it doesn't account for taxes on interest income, account fees, or changes in the interest rate over time, all of which can affect your real-world results.