What is the difference between simple and compound interest?

Simple interest is calculated only on the original principal. Compound interest is calculated on the principal plus previously earned interest, so the balance grows faster over time.

How does compounding frequency affect my interest?

The more frequently interest compounds (daily, monthly, quarterly, annually), the more interest you earn, because interest starts earning interest sooner.

Interest Calculator

See how much your money earns over time.

Interest Details

Principal Amount ($)

Annual Interest Rate (%)

Time Period (years)

yrs

Compounding

Total Interest

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Total Amount (Principal + Interest)

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Effective Annual Rate

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Simple vs compound interest

Simple interest: only the original principal earns interest. Great for short periods and simple loans.

Compound interest: interest earns interest. Choose a compounding frequency to see the effective annual rate — continuous compounding gives the highest return, followed by daily, monthly and quarterly.

Interest Calculator FAQ

What is the effective annual rate?▶

It is the real yearly rate after compounding. With 6% nominal interest compounded monthly, the effective annual rate is about 6.17% because interest earns interest every month.

Which compounding frequency gives the highest return?▶

Continuous compounding gives the highest return, then daily, monthly, quarterly, semi-annually and annually. The differences shrink as rates get lower.