Simple and compound interest calculator

How the estimate works

Simple interest: interest = principal × annual rate × years. The same original principal is used for each year, so interest is not added back to the balance.

Compound interest: ending balance = principal × (1 + annual rate ÷ compounding periods per year)^{compounding periods per year × years}. Total interest = ending balance − principal. This assumes the entered nominal annual rate stays fixed and interest compounds at the selected frequency. No additional deposits or withdrawals are modeled.

The CFPB illustrates compounding with $1,000 at 5%: annual interest raises the balance to $1,050 after one year and $1,102.50 after two years because the second year's interest also applies to the first year's interest. With simple interest under the formula above, the same two-year inputs produce $100 interest and a $1,100 ending balance. These are illustrations, not a promised savings or investment result. Source checked November 3, 2026: CFPB: How does compound interest work? (last reviewed October 19, 2023).

For another official compound-interest tool, see the SEC's Investor.gov Compound Interest Calculator. Actual accounts and loans may use different rate conventions, day counts, compounding rules, fees, payment timing, variable rates, or tax treatment. Check the account or loan documents. This page is a general educational estimate, not individualized financial or investment advice.

When to use each scenario

Simple interest can illustrate a calculation where interest is based only on original principal over the stated time. Compound interest illustrates how a balance changes when earned interest is added to principal at each compounding interval. Loan payments, credit-card balances, savings accounts, and investments can follow different contract rules; this tool does not model scheduled payments, changing balances, or product-specific terms.

For a savings target with recurring monthly contributions, use the official CFPB savings goal calculator or Investor.gov calculator and verify how each tool handles contribution timing and assumptions.

How it works

Choose simple interest, compound interest, or a side-by-side comparison. Enter a starting principal, fixed annual interest rate, whole-year term, and (for compound interest) compounding frequency. The calculator shows the selected model's inputs, formula, total interest, and ending balance.