Accurate Interest Calculator

Simple and Compound Interest Calculations for Savings, Investments or Loans

This calculator calculates the interest amount due between any two dates. In addition to simple interest is supports a dozen compounding periods (did we miss any? :). You can also enter negative interest rates.

Because this calculator is date sensitive, it is a suitable tool for calculating the interest owed on a debt. You can use it to calculate accrued interest from any point when the balance is known. More details below the calculator

Related: If you need to calculate interest for a series of payments, investments (deposits) or withdrawals, then you should use this Future Value of an Annuity Calculator.


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What is compound interest?

Compound interest is an interest-on-interest calculation. If you are paying (or earning) compound interest, you are paying (or earning) interest on previous interest.

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For example, if the interest rate is 2% and you start with $1,000 after the end of a year, you'll earn or owe $20 in interest (using annual compounding). Then at the end of two years, assuming there have been no withdrawals (or payments) you earn $20.40, not $20. The previous period's interest earned interest as well.

This pattern is called compounding, and it repeats as long as the money stays invested, or the debtor owes on the debt.

If you are an investor, you want to compound interest. If you are a debtor, you want to avoid it, particularly if you ever miss a payment or a payment is not enough to cover the interest due.

What is simple interest?

Simple interest is an interest-on-principle only calculation. On a loan, interest is not calculated on unpaid interest. If you are a debtor, you want to pay simple interest. Per Dictionary.com simple interest is "interest payable only on the principal." Interest is never earned or collected on previous interest.

Using the above example, if the interest rate is 2% and you start with $1,000 after the end of a year, you'll earn or owe $20 in interest. Then at the end of two years, assuming there have been no withdrawals (or payments) you earn another $20.00, (not $20.40). The previous period's interest does NOT earn interest.

Other details

What is annual percentage yield (APY)?

APY is the yield institutions must quote in the US for interest-bearing accounts. The Consumer Financial Protection Bureau defines APY in the Truth-in-Savings Act. Use the APY to compare deposit accounts.

What is the "Days In Year" option?

In finance, this is known as the "day count convention".

You may select 360, 365, or 366 days in a year. The "Days In Year" option impacts the interest expense calculation when you've selected simple interest, daily compounding, or when the time between the two dates includes a fractional or stub period. What's a fractional period? A fractional period incorporates the odd days "left" over that are not numerous enough for another compounding period. If you've set compounding to "Monthly" and the dates to March 15 and April 20, then there are five odd days, creating the fractional period (in this case, a fractional month). Fractional periods can lead to some strange results when compounding interest. The interest calculation can result in a larger amount for a less frequent compounding frequency than a more frequent one.

What is continuous compounding interest?

Continuous compounding occurs when the interest accrued is reinvested in a theoretically infinite number of periods. It is the mathematical limit to compounding.

What is the impact of negative interest rates?

When interest compounds at a negative rate, the investor pays someone to hold their money. This results in the future value being less than the present value. The best way to understand this is to try a calculation with an interest calculator that supports negative rates - such as this one.

You can use this interest calculator as a:

  • APY calculator
  • daily interest expense calculator
  • investment interest calculator
  • loan interest expense calculator
  • negative interest rate calculator
  • savings account interest calculator

As a side benefit to this calculator's date accuracy, you can use it for date math calculations. That is, given two dates, it will calculate the number of days between them, or it will find the date that is "X" days from the first date.

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