Question 1

What is simple interest?

Accepted Answer

Simple interest is calculated only on the original principal using the formula I = P × R × T. It does not compound over time. The total amount is A = P(1 + RT). Simple interest is common for short-term loans, car loans and some bonds.

Question 2

What is compound interest?

Accepted Answer

Compound interest is calculated on the principal plus accumulated interest. The formula is A = P(1 + r/n)^(nt) where r is annual rate, n is compounding periods per year, and t is years. Compounding makes your money grow exponentially over time.

Question 3

What is continuous compound interest?

Accepted Answer

Continuous compounding is the mathematical limit of compound interest as compounding frequency approaches infinity. The formula is A = Pe^(rt) where e is Euler's number (~2.718). Continuous compounding gives the maximum possible return for a given nominal rate.

Question 4

Is this interest calculator free?

Accepted Answer

Yes, this universal interest calculator is 100% free, runs entirely in your browser, and requires no signup. Your data never leaves your device.