Calculate simple interest
Calculate compound interest
| Year | Balance | Interest | Contributions |
|---|
How much do I need to save monthly to reach a goal?
What Is an Interest Calculator?
An interest calculator is a tool that helps you understand how money grows over time. Whether you want to know how much interest you’ll earn on a savings account, how much a loan will cost you, or how much you need to save each month to reach a financial goal — an interest calculator gives you the answer instantly.
Clear Calculator’s free interest calculator covers three of the most common scenarios: simple interest, compound interest (with optional monthly contributions), and a savings goal planner.
Simple Interest vs. Compound Interest
The key difference between simple and compound interest is whether interest is calculated only on the original principal, or also on the interest that has already accumulated.
Simple Interest
Simple interest is calculated solely on the principal amount. It does not grow over time — the same amount of interest is earned each period. Simple interest is commonly used for short-term loans and some bonds.
Total Amount = Principal + InterestExample: $5,000 × 5% × 3 years = $750 interest → $5,750 total
Compound Interest
Compound interest is calculated on the principal plus all previously accumulated interest. This means your interest earns interest — creating exponential growth over time. It is used for savings accounts, investment portfolios, retirement funds, and most modern financial products.
A = P × (1 + r/n)^(n×t)
Where:
A = Final amount
P = Principal
r = Annual interest rate (decimal)
n = Compounding frequency per year
t = Time in years
Example: $10,000 at 7% compounded monthly for 10 years = $20,097
Simple vs. Compound Interest — Side by Side
Here’s what a $10,000 investment looks like after 10 years at 7% annual interest, depending on the method:
| Year | Simple Interest | Compound (Annual) | Compound (Monthly) |
|---|---|---|---|
| Year 1 | $10,700 | $10,700 | $10,723 |
| Year 3 | $12,100 | $12,250 | $12,293 |
| Year 5 | $13,500 | $14,026 | $14,176 |
| Year 10 | $17,000 | $19,672 | $20,097 |
| Year 20 | $24,000 | $38,697 | $40,388 |
| Year 30 | $31,000 | $76,123 | $81,165 |
The difference between simple and compound interest becomes dramatic over long time horizons. After 30 years, monthly compounding produces more than 2.5 times the result of simple interest.
The Power of Regular Contributions
Adding regular monthly contributions dramatically accelerates wealth building. Our compound interest calculator includes an optional monthly contribution field to show you this effect.
Compounding Frequency — Does It Matter?
The more frequently interest is compounded, the faster your money grows. Most savings accounts compound daily or monthly. Here's how compounding frequency affects a $10,000 investment at 7% over 10 years:
| Frequency | Times per year | Final Balance |
|---|---|---|
| Annually | 1 | $19,672 |
| Semi-annually | 2 | $19,836 |
| Quarterly | 4 | $19,920 |
| Monthly | 12 | $20,097 |
| Daily | 365 | $20,136 |