Interest Calculator
Simple interest grows linearly — you earn only on the original principal. Compound interest grows exponentially because earned interest itself earns interest. Compare both on the same money.
Compound result
$16,470.09
- Simple interest result
- $15,000.00
- Advantage of compounding
- $1,470.09
- Interest earned (compound)
- $6,470.09
How the Interest Calculator works
The calculation follows the standard method used across the US — no shortcuts, no hidden assumptions. Here is exactly what happens behind the scenes:
Formula
Simple: A=P(1+rt) Compound: A=P(1+r/n)^nt
Frequently Asked Questions
When do lenders use simple interest?
Most auto loans and some personal loans use simple daily interest, while mortgages and credit cards use monthly compounding. Savings accounts almost always compound.
Does compounding frequency matter much?
More frequent compounding earns slightly more: $10,000 at 5% compounds to about $16,289 annually vs $16,487 monthly over 10 years. The rate and time matter far more than frequency.