💰 Financial
Interest Calculator
A versatile tool to calculate either simple or compound interest over time. See how different interest rates and time periods affect your total returns.
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Formula
Simple: A = P(1 + rt)
Compound: A = P(1 + r/n)^(nt)A- Final amount including interest
P- Principal starting amount
r- Annual interest rate
t- Time in years
n- Number of compounding periods per year
Example
Simple vs Compound Interest
Investing $1,000 for 5 years at 5% interest.
- Simple Interest: $1,000 × (1 + 0.05 × 5) = $1,250. You earn exactly $50 every year.
- Compound Interest (Annual): $1,000 × (1 + 0.05)^5 = $1,276.28. You earn interest on your previous interest, resulting in higher returns.
Frequently Asked Questions
Use simple interest for short-term personal loans or specific bonds. Use compound interest for bank accounts, investments, and most mortgages.