# Simple and Compound Interest Calculator

Use our tool to calculate simple and compound interest for investments and loans.

## How to use our interest rate calculator

Our calculator offers the option to determine both simple and compound interest rates. You can easily modify the principal or annual rate and instantly see the results chart change according to your input data.

### How to calculate simple interest using our calculator

Go through the following steps to correctly calculate your simple interest rate.

• Step #1: Make sure you have the simple interest option selected at the top.

• Step #2: Enter the principal amount in American dollars (use a currency converter if needed).

• Step #3: Input the percentage of the annual rate.

• Step #4: Select the desired period unit: years, quarters, months, weeks, days.

• Step #5: Input the period amount.

Here’s an example of how simple interest works:

John would like to borrow \$100 (principal) from the bank for one year. The bank is asking for 10% in interest to lend the money.

\$100 x 10% = \$10

This interest is added to the principal amount initially borrowed. Thus, John would end up paying back \$110, \$100 for the principal or original amount borrowed, and \$10 for the 10% interest charge.

### How to calculate compound interest using our calculator

The process of calculating compound interest is the same as for simple interest. You only have to select the compound option at the top. Go through the following step to correctly calculate your compound interest rate.

• Step #1: Make sure you have the compound interest option selected at the top.

• Step #2: Choose the desired frequency for your interest rate calculation: annually, semi-annually, quarterly, monthly, weekly, daily.

• Step #3: Enter the principal amount in American dollars (use a currency converter if needed).

• Step #4: Input the percentage of the annual rate.

• Step #5: Select the desired period unit: years, quarters, months, weeks, days.

• Step #6: Input period amount.

Here’s an example of how simple interest works:

Mary deposited \$1,000 in an account that pays 2 percent annual interest, so she would get \$20 in interest after a year. Compound interest refers to interest that Mary earns ON interest.

So, in year two, Mary would get 2 percent of \$1,020, or \$20.40 in interest payouts. Over the period of two years, Mary will have earned \$40.40 interest. On the long-term compound interest stacks and can help Mary build wealth passively.

### Benefits of using our interest rate calculator

Our tool can easily calculate the gained compound interest over a chosen investment time and the simple interest rate for loans. Use our free calculator to gauge how much you need to invest in your desired results and see which available return rates options will fit into your investment plan.

Our calculator will illustrate your potential investment results in a graph that changes as you modify the parameters: amount to invest, period of investment, and annual rate. This way, you can visually compare your options in real-time and make sure your decision is based on precise calculations.

• Calculate savings interest: Having a savings account is a significant step forward to improving your finances. When you want to know how much you're going to get back in interest from your savings account, you can calculate the actual amount based on the interest rate that your bank offers.

• Calculate retirement interest: Having a retirement plan is great, but it is even better when you know how much you will get back. Specific plans provide more interest than others. Calculating the interest rate for your retirement savings will help you choose the right retirement plan for your needs.

• Calculate personal loan interest: Personal loans are flexible and can be used for a wide range of everyday life situations. If you are taking out a personal loan, consider the interest rate you will get and how much you will end up paying over the life of the loan.

• Discover worthwhile investments: If you are an investor, you can purchase a portfolio of bonds or explore investment opportunities that generate high returns. It is crucial to understand how compounding interest works before putting your money into any project.

### Why we created this tool

Whatever you want to calculate, our interest rate calculator makes managing finances easy and helps you make the best financial decisions for your future. Our interest graph offers a clear view of the options of investment you’re researching. Instead of squinting your eyes at excel sheets of numbers, you can view all your investment options as visual graphs and make the best decision without any headache.

### What is the difference between simple and compound interest?

The difference between simple and compound interest is that simple interest is based on the principal amount initially borrowed or deposited. Compound interest is based on the principal amount and the interest that is added up every year. In this situation, interest can end up amounting to a higher sum than you initially expected.

### What are the compounding investment returns?

Compounding investment return is the rate of return for capital over a series of given time periods. Compound returns are a more accurate way of analyzing the performance of an investment over time, compared to average returns. This is due to the fact that average return does not take compounding into account in calculations, resulting in overestimating growth or underestimating decline in investments.

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