Interest Calculator: Simple and Compound Interest Side by Side
Enter a balance, a rate and a time to see the interest it earns or costs under simple interest and under yearly, quarterly, monthly and daily compounding.
Simple interest is the balance times the rate times the years. Compound interest adds each period's interest to the balance, so later interest is charged on earlier interest. On $1,000 at 6% for 3 years, simple interest comes to $180.00, while monthly compounding comes to $196.68 and daily compounding to $197.20.
This calculator gives an estimate for general education only. It is not financial advice, investment advice or a quote from any bank or lender. It assumes a fixed rate, no deposits, withdrawals or payments, and no fees or taxes. Real accounts and loans can use different day counts, variable rates and payment schedules, so the interest you earn or owe may differ. Check the terms of your account or loan, and talk to a qualified financial professional before making decisions.
Interest, compounded monthly
$6,470.09
Ending balance $16,470.09. Simple interest on the same terms is $5,000.00.
| Method | Interest | Balance | Effective rate |
|---|---|---|---|
| Simple interest | $5,000.00 | $15,000.00 | n/a |
| Compounded yearly | $6,288.95 | $16,288.95 | 5.000% |
| Compounded quarterly | $6,436.19 | $16,436.19 | 5.095% |
| Compounded monthly | $6,470.09 | $16,470.09 | 5.116% |
| Compounded daily | $6,486.65 | $16,486.65 | 5.127% |
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About the Interest Calculator
Interest always starts from the same three numbers: the balance, the annual rate and the time. What changes the answer is whether interest is ever added back to the balance. Simple interest never does, so every year earns the same amount on the original balance. Compound interest adds each period's interest to the balance, so the next period's interest is figured on a slightly larger sum. The more often that happens, the more you earn on savings or owe on debt, which is why this page lines up simple interest with yearly, quarterly, monthly and daily compounding for the same inputs. The effective rate column turns each schedule into a single yearly rate you can compare across banks or lenders. The table assumes no deposits, withdrawals or payments, so for savings with regular deposits use a compound interest calculator, and for a loan you repay monthly use a loan or amortization calculator instead.
Frequently asked questions
How do I calculate interest by hand?+
For simple interest, multiply the balance by the rate as a decimal and by the years: $1,000 x 0.06 x 3 = $180. For compound interest, divide the rate by the number of periods per year, add 1, raise it to the total number of periods, and multiply by the balance; subtract the balance to get the interest.
Is daily compounding much better than monthly?+
Only a little. On $1,000 at 6% for 3 years, monthly compounding earns $196.68 and daily compounding earns $197.20, a gap of about fifty cents. The jump from simple interest to any compounding is much larger than the jump between compounding frequencies.
What is the effective rate?+
It is the yearly rate that would give the same result with one compounding a year. A 6% rate compounded monthly works out to about 6.168% a year, and compounded daily to about 6.183%. Savings accounts quote this figure as APY; loans usually quote APR, which is the nominal rate before compounding.
Does this work for loans as well as savings?+
The interest math is the same, but this page assumes nothing is paid back until the end. Most loans are repaid in monthly installments that shrink the balance, so the interest on them is lower than the table shows. Use a loan calculator for an installment loan.
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