Find the interest on a deposit or loan. Choose simple interest (on the original amount only) or compound interest (interest on interest).
Simple interest
I = P × r × t
Interest is charged only on the original amount. $5,000 at 4% for 3 years earns 5,000 × 0.04 × 3 = $600, for a total of $5,600. Simple interest is used for many car loans, some personal loans, Treasury bills and short-term notes.
Compound interest
A = P × (1 + r/n)^(n × t)
Interest is added to the balance, and the next round of interest is charged on the bigger amount. Savings accounts, CDs, credit cards and most investments compound. The longer the time, the bigger the gap between simple and compound interest.
Simple vs compound interest on $5,000 at 4%
| Years | Simple | Compound (monthly) |
|---|
| 1 | $200.00 | $203.71 |
| 3 | $600.00 | $636.36 |
| 5 | $1,000.00 | $1,104.98 |
| 10 | $2,000.00 | $2,454.16 |
| 20 | $4,000.00 | $6,112.91 |
| 30 | $6,000.00 | $11,567.49 |
Interest on a loan
For a loan you pay back in monthly installments, the interest falls as the balance shrinks, so this calculator overstates it. Use it for loans repaid in one lump sum, or to estimate the interest on money you've borrowed or saved for a set time.
How we checked this
Before every update, this calculator is run in a real browser with these known answers, and it must match all of them:
- $5,000 at 4% simple for 3 years = $600 ✓
Last checked October 26, 2026. Spotted something wrong? The math is done in your browser with the formula shown on this page, so you can check any result by hand.
Questions people ask
How is simple interest calculated?
Multiply the principal by the yearly rate (as a decimal) and the number of years. $2,000 at 5% for 2 years is 2,000 × 0.05 × 2 = $200.
How do I calculate monthly interest?
Divide the yearly rate by 12. At 6% a year, one month's interest on $10,000 is 10,000 × 0.06 ÷ 12 = $50.
How do I calculate daily interest?
Divide the yearly rate by 365. At 4% a year, daily interest on $5,000 is about $0.55.
What's the difference between simple and compound interest?
Simple interest is only on the original amount. Compound interest is also on interest already added, so it grows faster over time.