Interest Calculator
Find out how much interest you earn on savings or pay on a loan, with simple or compound interest.
Want more options? The compound interest calculator adds a yearly step-up, a rate range and a goal date. The simple interest calculator works between two dates with every day-count rule and checks flat-rate loans.
Year-by-year table and chart
How your interest is worked out
Compound: amount × (1 + rate ÷ n)^(n × years). Simple: amount × rate × years.
- 1
Rate each period
5% ÷ 12= 0.4167% a month
- 2
Number of periods
10 years × 12= 120 months
- 3
Growth
(1 + 0.004167)^120= 1.6470
- 4
Interest earned
10,000 × 1.6470= 16,470− 10,000= 6,470
Read more: the formula, a worked example, APR vs APY and loans
Interest is the price of money. When you save, the bank pays you interest for using your money; when you borrow, you pay the lender. Simple interest is only worked out on the amount you started with. Compound interest is worked out on the balance including the interest already added, so it grows faster over time.
The formula
simple interest = amount × yearly rate × years
compound balance = amount × (1 + yearly rate ÷ n)^(n × years)
continuous: amount × e^(yearly rate × years)
interest = balance − money put in (+ money taken out)
APY = (1 + APR ÷ n)^n − 1
"n" is how many times a year interest is added: 1 for yearly, 4 for quarterly, 12 for monthly, 365 for daily. A rate a month is turned into a yearly rate by × 12. Time in days is divided by 365 (or 360, which some banks and loans use). Regular amounts are each grown for the time they are in the account.
Worked example
10,000 saved at 5% a year for 10 years, compounded monthly. The rate each month is 5% ÷ 12 = 0.4167%. There are 10 × 12 = 120 months, so the growth is 1.004167120 = 1.6470. 10,000 × 1.6470 = 16,470.09, so you earn 6,470.09 in interest. With simple interest it would be 10,000 × 0.05 × 10 = 5,000, and compounded yearly 10,000 × 1.0510 = 16,288.95.
APR and APY
APR is the headline yearly rate. APY (the effective annual rate, EAR or AER) is what you really get in a year once compounding is counted. Savings accounts usually quote APY; loans usually quote APR. Advanced mode lets you type either and shows both.
| 5% APR, compounded | APY | 10,000 after 10 years |
|---|---|---|
| Yearly | 5.000% | 16,288.95 |
| Monthly | 5.116% | 16,470.09 |
| Daily | 5.127% | 16,486.65 |
Interest on a loan
Choose "Borrowing" and add a repayment in Advanced mode. Each period the lender adds interest on what you still owe, and your repayment clears that interest first. Borrowing 10,000 at 12% a year and repaying 888.49 a month clears the loan in exactly 12 months; you pay 10,661.85 in all, so 661.85 is interest. With simple interest the repayment still pays the interest owed first, but interest is never charged on unpaid interest.
Finding the rate, time or amount you need
In Advanced mode, "Find" works backwards from a goal. It tries rates, times or amounts until the balance after the time matches your goal. For a loan, set "Still owed at the end" to 0 to find the rate you are really being charged, the time to pay it off, or how much you can borrow for a repayment you can afford.
Tax, inflation and today's money
Tax on interest is taken from each period's interest, so at a 20% tax rate 5% grows your money like 4%: 10,000 for 10 years compounded monthly becomes 14,908.33. "In today's money" divides the balance by (1 + inflation)years: 16,470.09 in 10 years with 3% inflation buys about what 12,255.29 buys today.
Assumes a fixed rate. With regular amounts, time is counted in whole payment periods. Fees, penalties and the way your bank rounds or counts days are not included, so its figures may differ slightly.
Common questions
How do you calculate interest?
Simple interest is amount × yearly rate × years, so 10,000 at 5% for 10 years earns 5,000. Compound interest adds the interest to the balance so it earns interest too: amount × (1 + rate ÷ n)^(n × years), where n is how often interest is added. Compounded monthly, the same 10,000 earns about 6,470.
What is the difference between simple and compound interest?
Simple interest is only ever worked out on the amount you started with, so you get the same interest every year. Compound interest is worked out on the balance including past interest, so it grows faster the longer you leave it. Over 10 years at 5%, 10,000 earns 5,000 simple but about 6,470 compounded monthly.
What is the difference between APR and APY?
APR is the headline yearly rate before compounding. APY (also called the effective annual rate or EAR) is what you really earn or pay in a year once compounding is counted. 5% APR compounded monthly is an APY of about 5.12%; 12% APR compounded monthly is about 12.68%. Advanced mode lets you type either one.
Does daily or monthly compounding earn more?
Daily earns a little more. 10,000 at 5% for 10 years grows to about 16,289 compounded yearly, 16,470 compounded monthly and 16,487 compounded daily. The more often interest is added, the more you earn at the same rate, but the gain from monthly to daily is small.
How long does it take to double my money?
Divide 72 by the yearly rate for a quick answer (the rule of 72): at 5% it takes about 14 years. The exact time is log(2) ÷ log(1 + APY), which is about 13.9 years at 5% compounded monthly. Use Advanced mode and choose "Time needed" to find the time to reach any goal.
How is interest on a loan worked out?
Most loans charge interest each month on the balance you still owe: balance × yearly rate ÷ 12. Your repayment clears that interest first and the rest brings the balance down. Borrowing 10,000 at 12% and repaying 888.49 a month clears the loan in 12 months, with about 661.85 paid in interest.
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