Interest Calculator (Simple & Compound)
Calculate simple and compound interest on your savings or investments. Compare how different rates, compounding frequencies, and time periods affect your returns.
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Simple vs Compound Interest
Simple Interest is calculated only on the original principal:
Compound Interest is calculated on the principal plus accumulated interest:
Where P = principal, r = annual rate, t = time in years, and n = compounding frequency per year.
The more frequently interest compounds, the more you earn. Daily compounding yields slightly more than monthly, which yields more than annually. Over long periods, compound interest produces dramatically higher returns.
Frequently Asked Questions
Simple interest is calculated only on the original principal. Compound interest is calculated on the principal plus any previously earned interest, leading to exponential growth over time.
More frequent compounding (daily vs annually) produces slightly higher returns because interest starts earning interest sooner. The difference is most noticeable with higher rates and longer time periods.
Simple interest is common in short-term loans, auto loans, and some bonds. Most savings accounts and investments use compound interest.
The Rule of 72 is a quick way to estimate how long it takes to double your money: divide 72 by the annual interest rate. At 6%, your money doubles in approximately 12 years.
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