Simple and compound interest.
What it's for
Work out how much interest a lump sum earns or costs over time when nothing is paid in or out, with simple and compound interest side by side. For a loan paid off in instalments, use the Loan Calculator instead.
Before you start
Have the amount, the interest rate and how long the money is left. Check whether the rate is quoted per year or per month.
Pick the kind of interest
Press Compound if interest is added to the balance and then earns interest itself. Press Simple if interest is only ever worked on the starting amount. Unsure? Leave Compound: the other kind is shown beside the answer anyway.
Enter the amount and the rate
Type the starting amount in Principal and the rate in Rate % — 6 for 6%. Use digits only: 100000, not ₱100,000.
Say whether the rate is per year or per month
In Rate is per, choose Year or Month to match how the rate was quoted. A monthly rate read as yearly gives an answer far too low.
Set the time and how often interest is added
Type the length in Years; part of a year is fine, such as 0.5 for six months. With Compound, choose in Compounds how often interest is added, as the bank or lender states it.
Press Calculate
Press Calculate. The answer already updates as you type; the button brings it into view.
Reading the result
If it goes wrong
Interest on a lump sum that sits untouched. Simple interest is charged on the original amount and grows in a straight line; compound interest is charged on the balance, which already includes what has been added, so it accelerates.
Both figures are always computed, whichever you pick, because the gap between them is usually what you are trying to see. And the rate carries its own period — per year or per month — because a monthly rate read as an annual one is off by a factor of twelve.
Ask, because the difference is enormous. Philippine lending is very often quoted per month, and 3% a month is 36% a year before compounding and 42.58% after. Reading a monthly rate as an annual one understates what you will pay by roughly twelve times, which is why the period is a field here rather than an assumption.
Simple interest is charged on the original amount only, so it grows in a straight line. Compound interest is charged on the balance, which already includes the interest added so far, so it accelerates. Over one compounding period they are identical; over any longer term compound is always more. Both figures are shown here whichever you choose.
What a nominal rate actually costs over a year once compounding is counted. 6% compounded monthly is 6.17% effective, because each month you begin paying interest on the previous month’s interest. It is the figure to compare two offers on — nominal rates with different compounding frequencies are not comparable.
No. This grows a lump sum that sits untouched. A loan is amortised — you make regular payments against a shrinking balance, so the interest falls each period. Use the Loan Calculator for anything with a monthly payment.
Yes. Type 0.5 for six months, or 2.25 for two years and three months. Simple interest scales exactly; compound interest applies the formula across the fraction of a period.
₱1,101.60 apart over three years. Over thirty the same rate would put them ₱270,000 apart.
On ₱100,000 over a year that is ₱3,000 against ₱42,576. Always ask which period a quoted rate is for.
Important
An actual quotation includes fees, insurance and documentary stamp tax, so an offer letter will normally differ from a figure computed here. Nothing you type here is sent to our servers — the calculation runs entirely in your browser.
