Interest Calculator

Simple interest: the plain starting point

Simple interest only ever applies to the original amount, never to interest already earned. The formula is short: interest equals principal times rate times time.

Put $100 in at 10% for one year and the interest is $100 × 0.10 × 1 = $10, for a total of $110. Leave that same $100 in for a second year and a third year on simple terms and each year adds exactly another $10, since the interest itself never gets folded back in to earn anything of its own. The simple interest calculator solves that same I = P × r × t relationship four different ways.

Compound interest: interest earning interest

Compound interest changes one thing: each period’s interest gets added to the balance before the next period’s interest is calculated, so growth starts compounding on itself. Run the same $100 at 10% for two years, compounded annually, and year one still adds $10 to reach $110, but year two adds 10% of $110 rather than 10% of $100, which is $11, for a total of $121. That is $1 more than simple interest’s $120 over the same two years, and the gap between the two only widens with more time or a higher rate, since every extra period of compounding gives interest another chance to earn interest of its own. The compound interest calculator is the right tool for exactly this clean, no-contributions case.

The Rule of 72: a shortcut for doubling time

The Rule of 72 estimates how many years it takes an amount to double at a given annual rate, without running the full compound interest formula: divide 72 by the rate. At 8%, that is 72 ÷ 8 = 9 years. The real, exact doubling time at 8% compounded annually works out to about 9.006 years, so the shortcut is accurate to a few days over a nine-year span. It gets noticeably less accurate at very high rates, but for the ordinary single-digit and low-double-digit rates most savings and investment planning deals with, it is a fast way to sanity check a result from this calculator without reaching for a formula.

Fixed vs. floating interest rates

A fixed rate stays the same for the entire term, which is what this calculator assumes when you type in one rate and leave it there. A floating (or variable) rate instead moves with some published benchmark, such as a central bank’s policy rate, and resets periodically over the life of the account or loan. Floating rates shift risk: a saver holding a floating-rate account benefits when the benchmark rises and earns less when it falls, while a borrower on a floating rate faces the opposite exposure. This calculator only models a single constant rate; approximate a floating rate by running it more than once at a few different assumed rates and comparing the results. Working backward from a loan’s payment to find its rate instead? The interest rate calculator solves that direction.

Contributions: timing changes the total

Adding a contribution on top of a starting balance means two things are growing together rather than one, and exactly when each contribution lands still matters. $100 a month for a year at 6%, compounded monthly, grows to $1,233.56 when each deposit lands at the end of its month, since a deposit made at the end has not yet had the chance to earn that month’s interest. The same contributions made at the beginning of each month instead grow to $1,239.72, a difference of $6.17 over just one year purely from timing, with no change to the amount contributed or the rate. That gap grows in both absolute size and, over a long enough term, as a share of total growth.

Tax rate: why it costs more than the tax itself

$100 at 6% for 20 years with no tax compounds to $320.71. Apply a 25% tax to each year’s interest as it is earned rather than to the final total, and the same $100 only reaches $241.17. The gap between those two figures, $79.54, is larger than simply taking 25% off the $220.71 of pre-tax interest would suggest, because every dollar paid in tax along the way is a dollar that never got the chance to compound for the remaining years. Interest taxed early costs more, in the end, than interest taxed late, purely because of how much time it loses.

Inflation rate: nominal balance vs. real buying power

Growth and inflation pull in opposite directions on the same number. A $100,000 ending balance sitting in an account earning 0% is still $100,000 in nominal terms after ten years, but under 3% average inflation its real buying power has fallen to roughly $74,409, since prices for everything that money would buy have risen over the same period. This calculator’s buying-power figure divides the ending balance by (1 + inflation rate) raised to the number of years, showing what the projected balance is actually worth in inflation-adjusted terms rather than only its face value at the end of the term.

Putting the interest calculator together: a $5,000 start with $200 a month

A $5,000 initial investment plus $200 contributed at the end of every month, at 7% compounded monthly for 15 years, grows to $77,637.19 with no tax or inflation applied: $41,000 of that is principal and contributions combined, and the remaining $36,637.19 is interest. Add a 15% tax rate to that same scenario and the ending balance drops to $70,095.76, since a share of every year’s interest is removed before it ever gets the chance to compound further. Add a 3% inflation rate on top of that after-tax figure and its buying power falls again, to roughly $44,991.80 in inflation-adjusted terms over the same 15 years. Three adjustments, each applied on top of the last, and each doing something genuinely different to the same starting numbers.

Reading the Accumulation Schedule, and common mistakes

The Accumulation Schedule below the result panel lists a Deposit, an Interest, and an Ending Balance figure for every row, switchable between an Annual and a Monthly view. The Interest column is always the after-tax figure once a tax rate is entered, already reflecting what was genuinely credited rather than a pre-tax number that would need adjusting by hand. Add every row’s Deposit column together and it matches the Total Contributions stat above exactly; the final row’s Ending Balance always matches the headline Ending Balance figure, a quick way to confirm the schedule and the summary agree.

A few mistakes come up often enough to flag directly. Mismatching the annual and monthly contribution fields with the actual plan, entering a monthly figure into the annual field or the reverse, is the most common one, and easy to miss since neither field rejects an unusual-looking number. Assuming tax only affects the final total rather than the whole growth path is the second; re-read the tax section above if a result looks smaller than expected next to a tax-free run of the same numbers, since that gap is doing exactly what it is supposed to. Treating a stock market return rate as guaranteed rather than a long-run average is the third, worth remembering whenever the money being modeled is not sitting in a fixed-rate account with a contractually guaranteed rate.