By ToolzHive
About this tool
The interest calculator shows how money grows with simple or compound interest. Choose how often interest compounds, add an optional monthly contribution, and see the final balance, total interest, effective annual rate and a year-by-year table. It is useful for savings accounts, deposits, investments and understanding how interest builds on a loan.
How to use Interest Calculator
- Enter the starting amount, the annual interest rate and the number of years.
- Choose simple interest or a compounding frequency, and add a monthly contribution if you plan to keep saving.
- Read the final balance, the interest earned and the yearly breakdown.
Worked example
$10,000 at 6% compounded monthly grows to about $18,194 after 10 years. With simple interest it would grow to only $16,000, because compound interest also earns interest on past interest.
What is the difference between simple and compound interest?
Simple interest is paid only on the original amount. Compound interest is added to the balance and then earns interest itself, so balances grow faster over time.
Does compounding frequency matter much?
More frequent compounding slightly increases growth. At 6%, monthly compounding gives an effective rate of about 6.17% a year versus 6% for yearly compounding.
What is the effective annual rate?
It is the yearly return after compounding is included. It lets you compare accounts that compound at different frequencies.
Put this guide into practice
- Interest Calculator — Calculate simple or compound interest with optional monthly contributions.