Enter a loan balance and the annual interest rate (%) to calculate the yearly interest on your loan. You can leave one field empty to calculate its value.
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Yearly Interest Formula
The calculator uses one of three formulas depending on the tab you choose.
Balance + rate (simple):
I = B * r
Balance + rate (compounded during the year):
I = B * ((1 + r/n)^n - 1)
Periodic amount:
I = p * k
Find balance or rate:
B = I / r r = I / B
- I = yearly interest
- B = principal balance
- r = annual interest rate as a decimal (5% = 0.05)
- n = compounding periods per year
- p = interest paid per period
- k = number of periods per year
The balance is held constant for one year. No deposits, withdrawals, fees, or taxes are factored in. Use the simple formula when your rate is already an APY or a flat annual rate. Use the compound formula when you have an APR that compounds monthly, daily, or otherwise during the year.
Reference Tables
Yearly interest on a $10,000 balance at common annual rates, simple calculation:
| Annual rate | Yearly interest | Monthly |
|---|---|---|
| 0.5% | $50 | $4.17 |
| 2% | $200 | $16.67 |
| 4% | $400 | $33.33 |
| 5% | $500 | $41.67 |
| 7% | $700 | $58.33 |
| 10% | $1,000 | $83.33 |
How an APR turns into an effective yearly rate at different compounding frequencies:
| APR | Monthly | Daily |
|---|---|---|
| 3% | 3.04% | 3.05% |
| 6% | 6.17% | 6.18% |
| 12% | 12.68% | 12.75% |
| 20% | 21.94% | 22.13% |
Worked Example
You have $25,000 in an account paying 4.5% APR compounded monthly. Using the compound formula:
I = 25,000 × ((1 + 0.045/12)^12 - 1) = 25,000 × 0.04594 = $1,148.50
If the same account quoted 4.5% APY instead, the yearly interest would be a flat 25,000 × 0.045 = $1,125.
FAQ
Should I enter APR or APY? Enter what your statement shows. If it says APR, use the compound option with the matching frequency. If it says APY, use the simple option.
Why is my compound result higher than the simple result? Compounding pays interest on prior interest within the year. The more frequent the compounding, the larger the gap.
Does this work for loan interest? Yes for a rough first-year estimate on a fixed balance. It does not account for principal paydown on amortizing loans.
Can I find the rate from interest paid? Yes. Use the third tab, choose "Annual rate from yearly interest and balance," and enter both numbers.
