Interest Calculator

How this interest calculator works

The calculator grows your starting amount and any regular contributions at a fixed interest rate, one month at a time, and adds each month's interest to the balance so that later interest is earned on it too. That is compound interest.

It first turns the rate and compounding schedule you choose into the rate one month of growth earns:

Monthly rate = (1 + rate ÷ n)^n/12 − 1
Monthly rate (continuous compounding) = e^rate/12 − 1
Equivalent yearly rate = (1 + monthly rate)¹² − 1

Here n is the number of times interest compounds in a year: 1 for annually, 2 for semiannually, 4 for quarterly, 12 for monthly, 24 for twice a month, 26 for every two weeks, 52 for weekly, and 365 for daily. Each month the balance earns the monthly rate, so 12 months add up to the same growth as a full year at your compounding schedule. The equivalent yearly rate is shown in the results, rounded to three decimal places.

Contributions and timing

You can add a yearly contribution, a monthly contribution, or both. Timing changes how much interest they earn:

• At the start of each period. The monthly contribution goes in before that month's interest is worked out, and the yearly contribution goes in at the start of every year, including a final part-year.
• At the end of each period. The monthly contribution goes in after that month's interest, and the yearly contribution goes in after each full 12 months. A final part-year gets no yearly contribution.

What the results show

• Ending balance. Everything you put in plus interest, minus any tax on that interest.
• Total deposited. Your starting amount plus all contributions.
• Total interest. Interest earned before tax.
• Interest on starting amount. What the starting amount alone would earn over the full length, before tax: starting amount × ((1 + equivalent yearly rate)^years − 1), using the rounded yearly rate shown in the results. Interest on contributions is the rest of the total interest.
• Total tax. If you enter a tax rate, that share of each month's interest is taken out before the rest is added to the balance, so only after-tax interest keeps compounding.
• Buying power after inflation. The ending balance in today's dollars: ending balance ÷ (1 + inflation rate)^years.

Frequently asked questions

How do I calculate interest by hand?

For a single deposit with interest compounded once a year, multiply the deposit by (1 + rate) once for every year. $10,000 at 4% for 5 years is 10,000 × 1.04⁵ = $12,166.53, which is $2,166.53 of interest. Regular contributions each earn interest for a different length of time, which is why a month-by-month schedule like the one above is easier than a single formula.

What is the difference between simple and compound interest?

Simple interest is paid only on the original amount: $1,000 at 5% earns $50 every year. Compound interest is paid on the original amount plus the interest already earned, so the same $1,000 earns $50 in year one, $52.50 in year two, and more each year after. This calculator always compounds.

Does compounding more often make a big difference?

It helps, but less than most people expect. At a 5% rate, yearly compounding earns 5.000% a year, monthly compounding earns 5.116%, and daily compounding earns 5.127%. The rate itself and how long you leave the money matter far more.

Is interest on savings taxed?

In the US, interest from bank accounts, money market accounts, and certificates of deposit is generally taxable income in the year it is credited, at your ordinary income tax rate. Enter your marginal rate to see the effect, or leave it at 0 for accounts such as an IRA where interest is not taxed each year.

Limitations

The calculator assumes one fixed interest rate, one fixed tax rate, and one fixed inflation rate for the whole period, with contributions that never change or stop. Real savings rates move, and your tax situation may differ. Treat the result as an estimate, not financial or tax advice.