Interest Calculator
Use this free Interest Calculator to calculate your Interest comparison instantly and accurately.
Your plan
Ending balance
What is an Interest Calculator?
An Interest Calculator shows how your money can grow over time when earning interest. Enter your starting amount, monthly contributions, annual interest rate, and investment period to see the ending balance and the total interest earned.
How to calculate interest manually (the formula)
The compound interest formula (with monthly compounding and contributions) is: FV = PV × (1 + r/12)12t + C × [ (1 + r/12)12t – 1 ] / (r/12) where PV is the starting amount, C is the monthly contribution, r is the annual rate, and t is the number of years.
Example calculation
Start with $5,000, add $100 per month, at 6% annual interest compounded monthly for 10 years: the ending balance is about $25,400. You contributed $17,000 ($5,000 + $12,000), and $8,400 came from earned interest.
Common mistakes
- Confusing APR and APY — APR is the annual rate without compounding. APY (Annual Percentage Yield) includes the effect of compounding and is usually higher.
- Not starting early enough — The earlier you start saving, the more time your money has to earn interest. Even small amounts add up significantly over decades.
- Ignoring the impact of inflation — If your interest rate is 3% and inflation is 3%, your real return is effectively zero. Aim for rates that outpace inflation.
- Chasing the highest rate without considering risk — Higher interest rates often come with higher risk. Make sure you understand the risk profile of any investment.
- Forgetting about taxes on interest income — Interest earned in taxable accounts is subject to income tax. Tax-advantaged accounts like IRAs can help you keep more of your earnings.
Frequently asked questions
How does an interest calculator work?
An interest calculator estimates the growth of your savings or investments by applying an interest rate to your starting balance and contributions over time. It shows the ending balance and how much of it came from interest.
What is the difference between interest rate and APR?
The interest rate is the basic cost of borrowing. APR (Annual Percentage Rate) includes the interest rate plus any fees charged by the lender, giving a more complete picture of the true cost.
How do monthly contributions affect my ending balance?
Regular monthly contributions significantly boost your ending balance by adding more principal and giving that new money time to earn interest. Even small monthly contributions add up over time.
What is a good savings interest rate?
Savings interest rates vary with the economic environment. High-yield savings accounts typically offer higher rates than traditional accounts. Compare APY (Annual Percentage Yield) when evaluating options.
Is this calculator free to use?
Yes, completely free with no sign-up or download required. You can use it as many times as you like.