Interest Calculator

Years10
Growth rate8%

Initial

$1,000

Contributed

$26,000

Interest

$14,858
$41,858
Total

Interest Explained

Interest is the cost of borrowing money or the reward for saving or investing it. It's usually shown as a percentage of the original amount (called the principal).

There are two main types of interest:

  • Simple Interest – Interest is only calculated on the original principal.
  • Compound Interest – Interest is calculated on both the principal and any interest already earned.

With simple interest, you earn or pay the same amount every period.

Example

Derek borrows $100 at 10% interest.

After 1 year:

  • Interest = $100 × 10% = $10
  • Total owed = $110

After 2 years:

  • Interest = $10 per year × 2 = $20
  • Total owed = $120

Formula

Interest = Principal × Interest Rate × Time

Simple interest is easy to calculate but is rarely used for long-term loans or investments.

Compound interest means you earn (or pay) interest on your interest.

Example

Derek borrows $100 at 10% interest.

Year 1

  • Interest = $10
  • Balance = $110

Year 2

  • Interest = 10% of $110 = $11
  • Balance = $121

Instead of owing $120 with simple interest, Derek owes $121 because the first year's interest also earns interest.

The more often interest is compounded (daily, monthly, quarterly, or yearly), the faster money grows.

Over long periods, even small differences in compounding frequency can significantly increase returns.

The Rule of 72 is a quick way to estimate how long it takes for money to double.

Formula

Years to Double ≈ 72 ÷ Interest Rate (%)

Example

At an 8% annual return:

72 ÷ 8 = 9 years

Your money will roughly double every 9 years.

This rule works best for interest rates between 6% and 10%.

Fixed Rate

  • Interest rate stays the same.
  • Payments are predictable.

Floating Rate

  • Interest rate can change over time.
  • Usually follows a market interest rate.
  • Payments may increase or decrease.

This calculator assumes a fixed interest rate.

Making regular deposits helps your savings grow faster.

You can contribute:

  • At the beginning of each period (earns more interest)
  • At the end of each period (earns slightly less interest)

Contributing earlier gives each deposit more time to compound.