Interest Earned Calculator

How it is calculated

The interest is a straight multiplication, with no compounding: interest = P × rate / 100 × years, where P is the deposit in dollars, the rate is the annual percentage and years can be a decimal (0.5 for six months). The total balance is P + interest, and the monthly figure is interest / (years × 12), the average interest for each month of the term. Because the interest is never added back to the base, the same amount is earned every year. Zero years gives zero interest and the principal unchanged. No input may be negative. Real accounts that compound will earn more than this result over the same term.

Common mistakes

• Using this for an account that compounds. Most savings accounts add interest to the balance regularly, so the real result is larger than simple interest.
• Entering the rate as 0.045. The field is a percentage, so 4.5% is 4.5.
• Typing months in the years field. For a 9-month deposit enter 0.75, not 9.
• Reading the monthly figure as what the bank pays each month. It is only the total divided by the number of months; with simple interest the money is usually paid at the end or at set dates.
• Forgetting tax on interest. The result is before any tax, so your actual gain is lower.