Accurate Interest Calculator
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.
Information
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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Pick a Date
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.
Enter an amount and a nominal annual interest rate.
Date Math: The number of days between the dates will get calculated when you change either date. If you enter a positive value for the number of days, the end date will be updated. If you enter a negative value for the number of days, the start date will be updated.
The above means you can calculate interest for a specific number of days and not worry about what the dates are. If you need to know the interest for 31 days, then enter 31 for the number of days and don't worry about the dates.
Set the compounding and days-in-year. Click "Calc." Interest and future value are calculated (FV is starting amount plus the interest.) Depositors should use the Annual Percentage Yield (APY) calculation for comparing deposit accounts. It is the rate institutions must quote in the US for interest-bearing accounts. The Consumer Financial Protection Bureau defines APY in the Truth-in-Savings Act.
Interest may be calculated based on a unit of time, say a month. This is known as "Periodic Interest" In that case, a month's interest is always the same for the same interest rate and same principal balance regardless of the length of the month. Given $10,000 principal and an interest rate of 6.75% the interest will be the same for February as it is for March. Note if you select a periodic method such as "weekly", "biweekly" etc., and if the dates enter do not equate to a number of full periods, then interest will be calculated for the fractional period by counting the days and calculating simple interest. This generally results in 1/2 a month's interest being less than 1/2 of a full month's interest when using monthly compounding.
There is also "exact day interest." Interest is calculated based on the number of days. In this case, the amount of interest will be different for February and March. Set compounding to "continuous", "daily" or "simple" for daily interest calculations.
mike says:
can your compounding calculator show and print out the schedule for the dates that are imputed?
Karl says:
This future value of an annuity calculator will allow you to print out a compounded interest schedule with the dates.
Is that what you mean?
Mike says:
Why can’t I Ctrl-V paste a number into the starting amount section. I’ve been using this webpage for years and this is something that was recently changed. Any reason why???
Karl says:
I was not aware of this change. It was not intentional.
I updated the code about 3 months ago to stay current with changes and enhancements found in new browsers.
I will review how the my code handles user inputs to see if I can allow paste to work again, but it will be a while before I can get to it. My plate is pretty full.
On the other hand, hopefully you know when you tab to an input (or click in it) the value is selected. You do not need to clear it. You can simply start typing. So if you had to enter say 500,000, it might be just as fast to type the 6 digits than selecting a number from another location, copying it, and then pasting it into the calculator.
But as I say, I’ll look into this.