Interest Calculator
$0.00 ending balance
Simple vs. Compound Interest
Simple interest is calculated only on your original principal for the entire term, using the formula I = P × r × t. Compound interest, by contrast, is calculated on the principal plus all previously accumulated interest, so your balance grows faster the longer it compounds. Most savings accounts, CDs, and investment accounts use compound interest, while some short-term loans and bonds use simple interest — check your account terms if you're unsure which applies.
Why Compounding Frequency Matters
For the same stated annual rate, daily compounding produces a slightly higher return than monthly or annual compounding, because interest starts earning its own interest sooner. The difference is usually small at low rates over short periods but becomes more noticeable at higher rates or over decades. This calculator assumes any additional contributions are made monthly and added at the start of each compounding sub-period.
Putting Your Results to Work
If you're modeling a long-term goal like retirement, the compound interest calculator offers a similar projection with more contribution flexibility, and the savings calculator can help you work backward from a target balance to the monthly deposit you'd need.
Frequently Asked Questions
What's the difference between simple and compound interest in this calculator?
Simple interest applies your rate only to the original principal for the whole term (I = P x r x t), so growth is linear. Compound interest applies the rate to your principal plus all interest already earned, so growth accelerates over time. Toggle the Interest Type dropdown to compare both on the same principal, rate, and term.
How are additional monthly contributions handled?
When you enter a monthly contribution amount, the calculator switches to a month-by-month simulation: each month it adds your contribution to the balance, then applies that month's compounding growth (converted from your selected compounding frequency to an equivalent monthly rate). This mirrors how a typical savings or investment account with automatic deposits behaves.