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Interest Calculator
Simple and compound interest on a principal. Pick compounding frequency. Free, browser-only maths.
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Calculator
What is the difference between simple and compound interest?
Simple interest is principal × rate × years. Compound interest earns interest on interest: principal × (1 + rate ÷ n)^(n × years).
Does more frequent compounding always earn more?
Yes for a fixed nominal rate: monthly beats annual. The gap shrinks as compounding gets finer.
How much difference does compounding frequency actually make?
Less than you might think. £10,000 at 5% for 10 years ends at £16,288.95 compounded annually and £16,486.65 compounded daily. The rate and the time do the heavy lifting.
Why does time matter more than the compounding schedule?
Because the interest on interest needs years to build. At 5% compounded monthly, £10,000 makes £6,470.09 in 10 years and £17,126.40 in 20. Twice the time, well over twice the interest.
What does AER mean on a savings account?
The FCA describes AER as reflecting how much interest a savings product pays over the year, including any compounding, bonuses and charges. With no bonuses or charges it is (1 + rate ÷ n)^n − 1, so 5% paid monthly is 5.12% AER.
£10,000 at 5% for 10 years, by compounding
Same nominal rate each time. Only the compounding changes.
| Method | Final amount | Interest |
|---|---|---|
| Simple | £15,000.00 | £5,000.00 |
| Annual | £16,288.95 | £6,288.95 |
| Quarterly | £16,436.19 | £6,436.19 |
| Monthly | £16,470.09 | £6,470.09 |
| Daily | £16,486.65 | £6,486.65 |
The formula
Simple interest: Interest = principal × rate × years Final amount = principal + interest Compound interest: Final amount = principal × (1 + rate ÷ n)^(n × years) Interest = final amount − principal rate is a decimal (5% = 0.05). n is how many times a year interest compounds (1 annual, 2 semi-annual, 4 quarterly, 12 monthly, 365 daily).
Worked example
£10,000 at 5% a year for 3 years.
Simple: interest = 10000 × 0.05 × 3 = £1,500. Final = £11,500.
Compounded annually: final = 10000 × (1.05)^3 = £11,576.25. Interest = £1,576.25.
Compounded monthly (n = 12): final = 10000 × (1 + 0.05/12)^(36) ≈ £11,614.72.
Same rate, more frequent compounding, slightly more interest. Banks know this.
Methodology
How it calculates
- Runs simple interest or compound interest with the compounding frequency you pick.
- Rate is treated as a nominal annual percent converted to a decimal.
Formula
Simple interest: Interest = principal × rate × years Final amount = principal + interest Compound interest: Final amount = principal × (1 + rate ÷ n)^(n × years) Interest = final amount − principal rate is a decimal (5% = 0.05). n is how many times a year interest compounds (1 annual, 2 semi-annual, 4 quarterly, 12 monthly, 365 daily).
Assumptions
- No fees, tax or contribution schedule in this tool.
- You supply the rate; nothing is fetched from a bank.
Edge cases
- More frequent compounding raises the final amount for a fixed nominal rate.
Sources
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FAQ
When should I use simple interest?
Short loans, some bonds quoted that way, or classroom examples. Most savings and investments compound.
Is APR the same as the rate I type here?
Not always. APR folds in fees and compounding rules set by regulation. This tool uses the rate you enter, nothing else.
What if I add money each month?
That is a contribution / annuity problem. Use the present value calculator for discounting a stream, or wait for the savings-plan tool on the roadmap.
Does this pull a live bank rate?
No. You type the rate. Currency is whatever unit your principal is in.
Sources
Rates, rules or specs last checked 1 Nov 2026. Confirm on the official page before you act.
Not financial advice. This calculator is for education only. Double-check results before you make money decisions. Past moves do not predict future ones.