Annually (1)
Semi-annually (2)
Quarterly (4)
Monthly (12)
Weekly (52)
Daily (365)
How many times per year interest is compounded.
Total Amount (A)
$0.00
Interest Earned: $0.00
Understanding the Compound Interest Formula
The interest formula calculator helps you understand how your money can grow over time through the power of compound interest. Compound interest is often called "interest on interest" because it means you earn interest not only on your initial investment (the principal) but also on the accumulated interest from previous periods. This exponential growth can significantly boost your savings or investments over the long term.
The Compound Interest Formula
The most common formula used to calculate compound interest is:
A = P (1 + r/n)^(nt)
Where:
A = the future value of the investment/loan, including interest
P = the principal investment amount (the initial deposit or loan amount)
r = the annual interest rate (as a decimal)
n = the number of times that interest is compounded per year
t = the number of years the money is invested or borrowed for
How This Calculator Works
Our calculator takes your inputs for:
Principal Amount (P): The initial sum of money.
Annual Interest Rate (r): The yearly rate of interest. You enter this as a percentage (e.g., 5 for 5%), and the calculator converts it to a decimal for the formula.
Time Period (t): The duration in years for which the interest is calculated.
Compounding Frequency (n): How often the interest is calculated and added to the principal within a year (e.g., annually, monthly, daily).
It then applies the compound interest formula to determine the total amount (A) you will have after the specified time, and also calculates the total interest earned (A – P).
Why Use an Interest Calculator?
Understanding the impact of compound interest is crucial for:
Savings & Investments: Estimating how much your savings accounts, fixed deposits, or investments will grow.
Loan Repayments: Understanding how interest accrues on loans (though this calculator is primarily for growth, not amortization).
Financial Planning: Setting realistic financial goals and seeing the potential returns of different investment strategies.
Comparing Options: Evaluating different investment products or savings plans based on their potential interest earnings.
By experimenting with different inputs, you can gain valuable insights into how principal, interest rate, time, and compounding frequency affect the growth of your money.
function calculateInterest() {
var principal = parseFloat(document.getElementById("principal").value);
var rate = parseFloat(document.getElementById("rate").value);
var time = parseFloat(document.getElementById("time").value);
var compounding = parseInt(document.getElementById("compounding").value);
var errorElement = document.getElementById("result");
var errorMessage = "Please enter valid numbers for all fields.";
if (isNaN(principal) || isNaN(rate) || isNaN(time) || isNaN(compounding) ||
principal <= 0 || rate < 0 || time <= 0 || compounding <= 0) {
errorElement.innerHTML = errorMessage;
return;
}
// Convert annual rate percentage to decimal
var rateDecimal = rate / 100;
// Calculate the total amount using the compound interest formula
// A = P (1 + r/n)^(nt)
var amount = principal * Math.pow(1 + (rateDecimal / compounding), compounding * time);
// Calculate the total interest earned
var interestEarned = amount – principal;
// Display the results
var resultValueElement = document.getElementById("result-value");
var interestEarnedElement = document.getElementById("interest-earned");
resultValueElement.textContent = "$" + amount.toFixed(2);
interestEarnedElement.textContent = "Interest Earned: $" + interestEarned.toFixed(2);
// Clear any previous error messages if calculation is successful
errorElement.style.backgroundColor = "#e6f7ff"; // Reset to default success color
errorElement.style.borderColor = "#91d5ff"; // Reset to default success color
}