The easy curiosity calculator computes the curiosity quantity and ending stability for financial savings. Calculate easy curiosity through the use of the formulation I = Prt. On this formulation, “I” equals the curiosity quantity, “P” equals principal (the beginning stability), “r” equals the rate of interest and “t” equals the variety of time intervals.
You should utilize the straightforward curiosity calculator beneath to determine how a lot curiosity you possibly can earn with completely different charges and time intervals.
SoFi Checking and Financial savings
NerdWallet score
NerdWallet’s scores are decided by our editorial workforce. The scoring formulation consider a number of knowledge factors for every monetary product and repair.
at SoFi Financial institution, N.A., Member FDIC
Don’t miss out on an even bigger bonus
Get a NerdWallet-exclusive bonus of as much as $400 once you open an account and hit $5,000 in direct deposits inside 25 days after your first one. That’s $100 greater than SoFi’s regular $300 bonus! Choose “Be taught Extra” to get began. Expires 4/22/24. Phrases apply.
Find out how to calculate easy curiosity in a financial savings account manually
You calculate the straightforward curiosity earned in a financial savings account by multiplying the account stability by the rate of interest by the point interval the cash is within the account. Curiosity in a financial savings account is cash you earn, not cash you pay, so the upper the rate of interest, the extra you possibly can earn.
P = Principal quantity (the start stability).
r = Rate of interest (often per 12 months, expressed as a decimal).
t = Variety of time intervals (usually one-year time intervals).
Easy curiosity calculation examples
Instance 1. Say you’ve gotten a financial savings account with $10,000 that earns 5% curiosity per 12 months. Expressed as a decimal, the rate of interest is 0.05, so the formulation could be:
Curiosity = $10,000 * 0.05 * 1. The curiosity earned on this instance equals $500.
Instance 2. Now say you need to see how a lot easy curiosity you’ll earn in two years. The formulation could be:
Curiosity = $10,000 * 0.05 * 2. The easy curiosity earned on this instance equals $1,000.
What’s the distinction between easy curiosity and compound curiosity?
Consider easy curiosity as a snapshot of your earnings throughout a set time interval. In order for you a tough concept of what you’ll earn, you should use the straightforward curiosity calculation. However in a financial savings account, your curiosity sometimes begins to earn curiosity over time as nicely. This is named compound curiosity. If you wish to decide exactly how a lot curiosity you possibly can earn in financial savings over time, you’ll need to take into account the impact of compounding.
The financial savings fee your financial savings account exhibits you is commonly truly the compound curiosity quantity, which is expressed as a share adopted by the phrases “annual share yield” or “APY.”
For instance, say you’ve gotten that very same $10,000 in a financial savings account that earns 5% APY, and you retain the cash within the account for 2 years. If the earnings are compounded month-to-month, you’ll obtain $1,049.41 in curiosity, versus the $1,000 with the straightforward curiosity calculation.
APYs for a few of the greatest financial savings accounts are above 5% as of April 2024. However different accounts earn a lot much less (the nationwide common financial savings fee is barely 0.46%). To maximise your financial savings, select a financial savings account that earns a excessive yield. You may then use our compound curiosity calculator, which considers compound curiosity, to see how a lot your financial savings stability may develop over time.