How to use the interest calculator
Enter the starting amount, the annual interest rate and the time in years or months, then pick how often interest compounds. The calculator shows the interest two ways at once: as simple interest, paid on the starting amount only, and as compound interest, where each period's interest is added to the balance and earns interest too. The difference between them is what compounding is worth over your time frame.
The frequency table repeats the compound result for yearly, semiannual, quarterly, monthly and daily compounding, with the annual percentage yield (APY) for each. The yearly table shows how the gap between the two grows. If you already know where you started and ended, use "Find the interest rate" to get the yearly rate behind it. Nothing you type is sent anywhere.
Simple interest: I = P × r × t
Simple interest is paid only on the principal, the amount you started with. The formula is I = P × r × t: principal times the annual rate as a decimal times the time in years. $10,000 at 5% for 5 years earns $10,000 × 0.05 × 5 = $2,500.00, or $500.00 every year, for a total of $12,500.00.
For months, divide by 12 first: $5,000 at 6% for 18 months is $5,000 × 0.06 × 1.5 = $450.00. For loans charged by the day, or for the 360-day "banker's year", use the simple interest calculator, which handles days and both day counts.
Compound interest: A = P(1 + r/n)^(nt)
Compound interest is interest on the principal and on the interest already earned (Investor.gov (SEC): compound interest). Each time interest compounds it is added to the balance, so the next period's interest is figured on a bigger number (CFPB: How does compound interest work?). The formula for the ending balance is A = P × (1 + r/n)n×t, where n is the number of times interest compounds per year.
With the same $10,000 at 5% for 5 years compounded monthly, the balance reaches $12,833.59, so the interest is $2,833.59. That is $333.59 more than simple interest. The longer the time, the bigger the gap: over 20 years the same deposit earns $10,000.00 as simple interest but $17,126.40 compounded monthly.
The U.S. Department of Defense's financial education site gives a published example (FINRED (U.S. Department of Defense): Understanding Interest): $10,000 at 4% for 3 years earns $1,200.00 of simple interest but $1,248.64 with yearly compounding. Over 40 years the figures become $16,000.00 and $38,010.21. Enter those numbers above to check them.
How much does compounding frequency matter?
Less than most people expect. On $10,000 at 5% for 5 years, yearly compounding pays $2,762.82, monthly pays $2,833.59 and daily pays $2,840.03. Moving from yearly to monthly adds $70.77; moving from monthly to daily adds only $6.45. The rate and the time matter far more.
That is why U.S. banks quote savings accounts and CDs as an annual percentage yield, which already includes compounding (CFPB: Regulation DD, Appendix A (annual percentage yield)). A 5% rate compounded monthly is an APY of 5.116%. If your bank gives you an APY, enter it here with yearly compounding, or use the high-yield savings calculator or the CD calculator, which take APY directly.
Where you meet each kind of interest
Savings, CDs and investments usually compound, so the compound column is the one to watch. To add regular monthly deposits, use the compound interest calculator.
Auto loans and many personal loans charge simple interest on the balance you still owe; the CFPB says this is far more common on auto loans than precomputed interest (CFPB: simple interest vs. precomputed interest on an auto loan). Because each payment lowers the balance, the interest on a loan you pay monthly is less than the simple interest on the full amount for the whole term. For a payment schedule, use the loan calculator or the amortization calculator.
Credit cards typically charge interest that compounds, which is why carrying a balance gets expensive quickly. Short loans between people, some bonds, and CDs that pay interest out to you behave like simple interest.
Finding the interest rate
If you know the start and end amounts, you can solve for the rate. As simple interest, r = (A ÷ P − 1) ÷ t. As compound interest, r = n × [(A ÷ P)1/(n×t) − 1]. Growing $10,000 to $12,000 in 4 years is 5% a year as simple interest, or 4.57% a year compounded monthly. The compound rate is lower because interest earned along the way does part of the work.
Updated October 31, 2026 · Sources are linked in the text above · How we build and check our calculators