Interest Calculator
Calculate simple interest, compound interest, and compare different investment scenarios.
Interest Calculation Information
Understanding different types of interest calculations helps you make better financial decisions for savings and investments.
Types of Interest:
- Simple Interest: Interest calculated only on the principal amount
- Compound Interest: Interest calculated on principal plus previously earned interest
- Continuous Compounding: Interest compounded infinitely often
Formulas Used:
- Simple Interest: I = P × r × t
- Compound Interest: A = P(1 + r/n)^(nt)
- Continuous Compounding: A = Pe^(rt)
Key Factors:
- Principal (P): The initial amount of money
- Interest Rate (r): Annual interest rate as a decimal
- Time (t): Time period in years
- Compounding Frequency (n): Number of times interest is compounded per year
Investment Tips:
- Higher compounding frequency generally yields better returns
- Time is a powerful factor in compound interest growth
- Even small differences in interest rates compound significantly over time
- Regular contributions can dramatically increase your final amount