Interest Calculator
| Month | Contribution | Interest | Balance |
|---|---|---|---|
| 1 | $0.00 | $10.00 | $1,010.00 |
| 2 | $0.00 | $10.10 | $1,020.10 |
| 3 | $0.00 | $10.20 | $1,030.30 |
| 4 | $0.00 | $10.30 | $1,040.60 |
| 5 | $0.00 | $10.41 | $1,051.01 |
| 6 | $0.00 | $10.51 | $1,061.52 |
| 7 | $0.00 | $10.62 | $1,072.14 |
| 8 | $0.00 | $10.72 | $1,082.86 |
| 9 | $0.00 | $10.83 | $1,093.69 |
| 10 | $0.00 | $10.94 | $1,104.62 |
| 11 | $0.00 | $11.05 | $1,115.67 |
| 12 | $0.00 | $11.16 | $1,126.83 |
- Choose what you want to find: final amount, principal, rate or time.
- Fill in the three known values.
- Choose the rate period — daily, monthly or yearly.
- The result shows the missing value, the total interest and the formula applied.
With simple interest, the return always applies to the initial principal. The amount earned per period is constant from start to finish.
With compound interest, the return applies to the accumulated balance, so the previous period’s interest earns interest too.
Over short terms the difference is small. Over long terms it becomes enormous, which is why simple interest barely appears in long-term financial products.
- Late payment penalties, often calculated simply on the amount owed.
- Short-term calculations and quick estimates, where the gap to compound is irrelevant.
- Certain contracts and instruments that expressly stipulate the simple regime.
- School exercises — where most people first meet the concept.
This is the mistake that dominates interest calculations. A monthly rate requires a term in months; a yearly rate requires a term in years.
Under the simple regime, converting between periods is proportional: 12% per year equals 1% per month. That holds here and does **not** hold for compound interest, where conversion is exponential.
The result is gross: no tax, management fee or inflation adjustment is deducted.
- Enter the initial principal, the rate and the term.
- Choose the rate period: daily, monthly or yearly.
- The result shows the final amount and how much of it is interest.
With simple interest, the return always applies to the initial principal. With compound interest it applies to the accumulated balance — meaning last month’s interest earns interest too.
Over short terms the difference is small. Over long terms it dominates completely: 1000 at 1% per month for 30 years yields roughly 3,600 under simple interest and over 35,000 under compound.
It is the same mathematics that grows an investment and lets credit card debt spiral. The direction changes, the mechanism is identical.
This is the most common mistake. A monthly rate requires a term in months; a yearly rate requires a term in years. Mixing them produces a result that looks plausible and is wrong by orders of magnitude.
Converting between periods is also not simple division. A 12% annual rate is not the same as 1% monthly under compounding: 1% per month compounded over twelve months gives about 12.68% per year.
That difference has a name — nominal versus effective rate — and it is exactly where reading a contract tends to mislead.
There is no deduction for income tax, transaction taxes, management fees or inflation. The amount shown is gross and nominal.
Many fixed income products apply tax on the return, which reduces the net figure depending on the term.
Nominal return is not real gain: if the amount grows 8% in a year while inflation was 6%, purchasing power rose by roughly 2%, not 8%.
Frequently asked questions
With simple interest the return always applies to the initial principal and is constant per period. With compound interest it applies to the accumulated balance, so interest earns interest.
Under the simple regime, yes: conversion is proportional. Under compounding, no, because capitalisation is exponential and the annual result would be about 12.68%.
Yes. Choose to solve for rate and enter principal, amount and time. The same works for finding the term or the initial principal.
No. The result is gross and nominal, with no tax, management fee or inflation adjustment.
No. The calculation runs in your browser.
Not under compounding. One percent a month compounded over twelve months equals about 12.68% per year. The gap between nominal and effective rate grows with compounding frequency.
No. Rate and term must use the same unit, or the result is wrong by orders of magnitude. Convert one of them first.
No. The amount is gross. Many jurisdictions tax investment returns, which reduces the net figure.
No. The figure is nominal. To find the real gain, subtract inflation for the period — an 8% return with 6% inflation is roughly 2% of purchasing power gained.
No. The calculation runs in your browser.