Interest Earned Calculator

What is the Interest Earned Calculator for and why should I use it?  

Having a savings account or investment gives you the opportunity for your money to earn through interest rates. This is called compound interest or compounding interest. You can earn money not just from your principal amount but also from your accumulated interest from past periods. 

To find out how much you can earn from compounding interest, our interest earned calculator is a helpful tool to use. This will help you determine:

• How much money you can save with regular deposits

• How much compound interest can help boost your savings

• Give you a projection how much you'll have saved based on the number of years you have the account

To use our Interest Earned Calculator, simply put in financial details such as your:

• Initial deposit: This is the original balance deposited into your account. 

• The amount of your regular deposit: The amount you will regularly save.

• Deposit frequency: The frequency of your deposit into your account, it can be daily, weekly, fortnightly, monthly, or annually.

• Number of years: This is how long you plan to keep the account.

• Annual interest rate: The interest rate of your savings account or investment. 

How is Interest Earned Calculated? 

Interest Earned is calculated using this formula:

Where

A = ending balance

P = initial deposit

r = annual interest rate, as a decimal rather than percent (also called APR)

n = number of time interest is compounded per time period (nt)

t = time period

To use as an example, let’s say you have an initial deposit of $10,000 and an annual interest rate of 5% for over 5 years, with interest compounding on a monthly basis.

A = ending balance

P = $10,000

r = 5% or 0.05

n = 12

nt = 1

So using the formula, it will be: 

A = P(1 + r/n)^nt
A = 10,000 x (1 + 0.05/12)^(12)(5)
A = 10,000 x (1 + 0.004166667)⁽⁶⁰⁾
A = $12,833.59

You’ll have $12,833.59 by the end of the 5-year term. The more money you regularly deposit and the longer you save, the more you can earn on interest. So, it’s recommended to save regularly to take advantage of compound interest and high interest savings accounts.

If you want a quicker and easier way in computing how much you can earn from interest, you can use our free Interest Earned Calculator. 

What does ‘Compound Interest’ Mean?

Compound interest means you can earn not only from your initial deposit but also on previous interest that was added to your investment or savings. Basically, it gives you the benefit to earn interest on top of the interest you already earned.

Here is an example of how you can earn through compounded interest. Say your initial money deposited is $10,000 with a 4% interest rate per annum, here's what it will look like through the 10 year period.

$10,000 with 4% annual rate with no monthly deposit

The longer you save, the more money you can earn through interest with the power of compounding. 

Here is another example if you decide to do a regular deposit of $50 per month. 

$10,000 with 4% annual rate with $50 regular monthly deposit

Doing a regular deposit on your savings or investment that offers compounding interest can really help you take advantage of the time, so you can easily increase your savings.