Compound / Simple Interest Calculator
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About Our Compound & Simple Interest Calculator
Understanding how money grows through interest is fundamental to building wealth and making smart investment decisions. Compound interest—often called the "eighth wonder of the world"—can dramatically accelerate wealth growth over time, while simple interest provides a baseline for comparison. Our free Compound & Simple Interest Calculator lets you visualize the difference and explore how monthly contributions, compounding frequency, and rising rates impact your investment growth.
Whether you're saving for retirement, building an emergency fund, or analyzing investment opportunities, this calculator reveals the power of consistent contributions and the impact of interest rates. Compare compound interest at different frequencies (daily, monthly, quarterly, annual) and see exactly how much more your money grows compared to simple interest. All calculations happen locally in your browser with complete privacy.
Frequently Asked Questions
What's the difference between compound and simple interest?
Simple interest is calculated only on your initial principal. Compound interest is calculated on principal PLUS accumulated interest, causing exponential growth. Over time, compound interest significantly outpaces simple interest.
What does compounding frequency mean?
Compounding frequency is how often interest is added to your account. Daily compounding (365 times/year) grows faster than monthly (12 times/year), which grows faster than annually (once/year). More frequent compounding = faster growth.
How much difference does compounding frequency really make?
For small amounts and short periods, the difference is minimal. But for large sums or long periods (10+ years), daily compounding can generate hundreds or thousands more than annual compounding. Use this calculator to see the exact difference for your situation.
What's the effective annual rate (EAR)?
EAR accounts for compounding and shows your true annual return. A 6% APR compounded monthly becomes about 6.17% EAR. This calculator shows your effective annualized return, helping you compare different compounding structures fairly.
How does adding monthly contributions affect growth?
Monthly contributions dramatically accelerate compound growth. Small regular deposits ($50-500/month) often grow to more than lump-sum investments due to compounding on each new contribution. This calculator shows the combined power of both.
What's the Rule of 72?
The Rule of 72 estimates how long money takes to double. Divide 72 by your interest rate to get approximate years to double. At 8% return, your money doubles roughly every 9 years (72÷8). Use this calculator to verify exact doubling times.
How do I use this for retirement planning?
Enter your current savings as principal, your monthly contribution amount, expected return rate, and years to retirement. The calculator shows how much you'll have, helping you adjust contributions or retirement timeline to reach your goal.
Does inflation affect these calculations?
This calculator shows nominal (not inflation-adjusted) growth. To estimate real purchasing power, subtract inflation rate from your interest rate. For example, 6% return minus 3% inflation = 3% real return.
What if interest rates change over time?
Use the "Annual Rate Increase" option to model step-up returns. For example, if rates increase 0.25% yearly, this models that rising rate scenario. Helpful for comparing fixed vs variable rate products.
Is my data stored when I use this calculator?
No. All calculations happen entirely in your browser. We don't store, transmit, or track any of your financial information. Your privacy and data security are completely protected.