Interest Calculator
Calculate simple and compound interest on savings or investments. Compare growth over time with year-by-year breakdown.
Total Value After 5 Years
$12,500.00
Principal
$10,000.00
Interest Earned
$2,500.00
Rate
5.00%
Year-by-Year Breakdown
| Year | Balance | Interest Earned |
|---|---|---|
| 1 | $10,500.00 | $500.00 |
| 2 | $11,000.00 | $1,000.00 |
| 3 | $11,500.00 | $1,500.00 |
| 4 | $12,000.00 | $2,000.00 |
| 5 | $12,500.00 | $2,500.00 |
Frequently Asked Questions
What is the difference between simple and compound interest?+
Simple interest is calculated only on the original principal: I = P × r × t. Compound interest is calculated on principal plus accumulated interest, so you earn 'interest on interest'. Over time, compound interest grows much faster.
What is APY?+
APY (Annual Percentage Yield) is the effective annual rate when compounding is factored in. A 5% rate compounded monthly has an APY of 5.12%. APY lets you compare accounts with different compounding frequencies.
How often should interest compound?+
More frequent compounding earns slightly more. Monthly vs annual compounding on $10,000 at 5% for 10 years: monthly = $16,470 vs annual = $16,289 — a $181 difference. Daily compounding adds even less beyond monthly.