Interest

Growth on a principal

Interest is the cost of borrowing or the return on lending money. Simple interest applies the rate only to the original principal. Compound interest adds interest to the balance so later periods earn interest on interest. This calculator makes that difference visible for educational comparisons.

Formulas (overview)

• Simple: I = P × r × t (with r as a decimal rate for the period basis you choose)
• Compound: A = P × (1 + r/n)^(n t) for n compounding periods per year (when that mode applies)

Worked example

£1,000 at 5% for 3 years simple earns £150 interest (total £1,150). Compounded annually it grows to about £1,157.63 — a small gap early that widens over long horizons.

Common mistakes

• Mixing APR advertising with the exact compounding schedule on a statement.
• Forgetting fees that dominate short loans.
• Comparing inflation-adjusted returns using raw interest only — see Inflation.

FAQs

Is this a loan amortisation schedule?

For instalment loans see Loan; for home loans see Mortgage.

APR vs interest rate?

APR vs interest rate.

When this page helps

Use it when you want a transparent, browser-side calculation with the assumptions spelled out — then verify anything high-stakes against primary docs, a professional, or your own measurements. The related links below point to sibling tools and longer guides when you need more context.

Accuracy notes

Results depend entirely on the numbers you enter and the simplified model described above. Device clocks, tape measurements, market rates, and recipe conventions can all differ from a perfect textbook case. If an output looks surprising, re-check units first, then re-read the formula section.

Related: Loan, Mortgage, Inflation.