Interest Rate Calculator
Calculate simple & compound interest, compare APR vs APY, analyze loan costs, and project investment growth with the most comprehensive calculator available.
Interest Rate Calculator
Compare rates and calculate returns
Calculator Mode
Calculator Inputs
⚡ Quick Scenarios
Basic Information
Compounding Options
Final Balance
After 10 years with monthly compounding
Breakdown
Growth Over Time
Balance Breakdown
Compounding Frequency Impact
📚 Master Interest Rates
📊 Understanding APR vs APY
APR (Annual Percentage Rate) is simple interest. APY (Annual Percentage Yield) includes compounding. A 5% APR compounded monthly = 5.12% APY.
Rule: For savings, look at APY (higher is better). For loans, look at APR (lower is better).
💰 Compound Interest Power
Compound interest is "interest on interest." $10,000 at 7% simple interest = $17,000 in 10 years. With compound interest = $19,672. That's $2,672 extra from compounding alone.
Einstein: "Compound interest is the 8th wonder of the world."
📈 How Interest Rates Work
Interest rates are the "price of money." When you save, the bank pays you interest to use your money. When you borrow, you pay the bank interest to use their money.
Factors: Federal Reserve rates, inflation, credit score, loan term, and market demand all affect rates.
🏦 Fixed vs Variable Rates
Fixed rates never change (e.g., 6% for 30 years). Variable rates fluctuate with market conditions (e.g., Prime + 2%). Fixed = predictable. Variable = risky but potentially lower.
Best for: Fixed rates when rates are low. Variable when rates are high and expected to drop.
💡 Rate Shopping Tips
A 0.5% rate difference on a $300K mortgage = $30,000 saved over 30 years. Always compare APR (not just interest rate) to include fees. Get quotes from 3+ lenders.
Credit score impact: 760+ score can save you 1-2% vs 620 score. That's $60K+ on a $300K loan.
⚠️ Hidden Rate Costs
Advertised rates often exclude: origination fees (1-2%), points (1 point = 1% of loan), application fees, and prepayment penalties. Always ask for APR, which includes most fees.
Watch out: "Teaser rates" that jump after 6-12 months. Read the fine print.
How to Use This Interest Rate Calculator
Select Calculation Mode
Choose from 6 modes: Simple Interest, Compound Interest, APR to APY, Loan Cost, Investment Growth, or Effective Rate.
Enter Your Values
Input principal amount, interest rate, time period, and compounding frequency (if applicable).
View Results & Charts
See calculated interest, total amount, and visual charts showing growth or cost over time.
Frequently Asked Questions
What's the difference between APR and APY?
APR (Annual Percentage Rate) is the simple interest rate charged per year without compounding. APY (Annual Percentage Yield) includes the effect of compounding interest. APY is always higher than APR when compounding occurs more than once a year. For example, 5% APR compounded monthly equals 5.12% APY. When comparing savings accounts, use APY (higher is better). When comparing loans, use APR (lower is better).
How does compound interest work?
Compound interest is "interest on interest." You earn interest on your initial principal plus all the accumulated interest from previous periods, causing your money to grow exponentially over time. For example, $10,000 at 7% simple interest grows to $17,000 in 10 years. With compound interest, it grows to $19,672—an extra $2,672 from compounding. The more frequently interest compounds (daily vs monthly vs yearly), the more you earn.
Why do interest rates vary so much?
Interest rates vary based on: Federal Reserve policy (sets baseline rates), inflation (higher inflation = higher rates), your credit score (760+ gets best rates, 620 pays 1-2% more), loan term (30-year mortgages cost more than 15-year), loan type (secured loans like mortgages have lower rates than unsecured like credit cards), and market competition. A 1% rate difference on a $300K mortgage = $60,000 over 30 years, so shopping around matters.
How can I get the best interest rate?
To get the best rate: (1) Improve your credit score to 760+ (pay bills on time, reduce credit utilization below 30%, fix errors on credit report), (2) Shop around—get quotes from at least 3 lenders, (3) Make a larger down payment (20%+ avoids PMI and gets better rates), (4) Choose a shorter loan term if you can afford higher payments, (5) Consider paying points (1 point = 1% of loan) to buy down the rate, and (6) Time your application when rates are low.