Interest Calculator

Simple vs Compound Interest

Interest is the cost of borrowing money or the reward for saving it. Two fundamental types exist:

• Simple interest is calculated only on the original principal. It grows linearly over time.
• Compound interest is calculated on the principal plus accumulated interest. It grows exponentially — the longer the period, the more powerful the effect.

Interest Formulas

Simple Interest

I = P × r × t

Where P = principal, r = annual rate (decimal), t = time in years.

Compound Interest

A = P × (1 + r/n)^(n×t)

Where n = compounding frequency (12 = monthly, 4 = quarterly, 1 = annually).

How to Use This Calculator

1. Enter the principal amount.
2. Enter the annual interest rate (%).
3. Select simple or compound interest.
4. Enter the time period in years or months.
5. Click Calculate to see total interest and final balance.

Practical Examples

Savings: $5,000 at 4% compound interest over 10 years grows to $7,401 — earning $2,401 in interest.

Loan: $10,000 simple interest loan at 6% for 3 years costs $1,800 in interest, for a total repayment of $11,800.

Frequently Asked Questions

Which earns more — simple or compound interest?

Compound interest always earns more over time because interest is reinvested. The difference becomes dramatic over long periods.

What compounding frequency should I choose?

Most savings accounts compound monthly (n=12). Some bonds compound annually (n=1). The more frequent the compounding, the higher the effective annual rate.

How to Use This Calculator

Using our calculator is simple: enter the required values into the input fields and click the calculate button. Results are displayed instantly on screen. You can adjust the values and recalculate to compare different scenarios and find the best option for your situation.

Frequently Asked Questions

Important Notes

This calculator is provided for informational purposes only. For legal, financial, or medical decisions, always seek advice from qualified professionals. Calculation results do not constitute official documents. Legislative changes may affect results; please visit the relevant official website for the most up-to-date information. Our calculators are regularly updated to reflect current regulations and rates.

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