Interest Rate Calculator

How this interest rate calculator works

Many calculators tell you the future value of an investment if you already know the interest rate. This tool does the opposite: it solves for the unknown interest rate using your starting amount, ending balance, time period and compounding frequency.

For a simple lump-sum deposit or loan with no extra payments, the math is:

FV = PV × (1 + r/m)^(m × t)

PV = starting amount
FV = ending balance
r  = nominal annual interest rate (what we solve for)
m  = number of compounding periods per year
t  = time in years

Rearranging this formula to isolate r gives the implied interest rate. The calculator also converts this to an effective annual yield so you can compare offers with different compounding rules.

Step-by-step example: savings interest rate

Suppose you deposited $10,000 into a savings account. Three years later, the balance is $13,500. You want to know: what annual interest rate did the bank effectively pay?

• Starting amount (PV) = 10,000
• Ending balance (FV) = 13,500
• Time = 3 years
• Compounding = monthly (12 times per year)

Plug those numbers into the calculator and it will show an annual rate of roughly 10.1% nominal, with an effective annual yield around 10.6%. The total interest earned is about $3,500.

Using the interest rate calculator for loans

You can also use this as a quick loan interest rate estimator. If you know how much you borrowed and how much you still owe after a certain time, the tool can approximate the annual rate charged.

This is especially helpful for:

• Store financing and “buy now, pay later” plans.
• Family loans with irregular terms.
• Short-term bridge loans where the rate isn’t clearly stated.

Effective annual yield vs nominal interest rate

Lenders and banks often quote a nominal annual rate (for example “5% compounded monthly”). The real growth or cost is a little higher because interest is added several times per year.

The relationship is:

Effective annual rate = (1 + r / m)^m − 1

where r is the nominal annual rate and m is the number of compounding periods. The calculator shows both values so you can compare accounts that compound annually, quarterly, monthly or daily.

Common compounding options

Practical “low competition” uses for an interest rate calculator

Beyond classic textbook examples, there are plenty of real-life situations where a small interest rate change matters but online tools are hard to find. Here are a few niche use-cases this calculator is designed to handle:

• Hidden rate on a promotional savings pot. Banks sometimes advertise a “bonus” rate for a fixed period. Enter your starting and ending balances to uncover the true average yield.
• Effective rate on a crypto or DeFi wallet. Variable rewards can be confusing. If you snapshot your balance at two dates, this tool shows the annualised growth rate over that exact time window.
• Return on peer-to-peer loans between friends. If you lend money and simply agree on how much will be repaid later, this calculator translates that into an equivalent yearly percentage rate.
• Checking rent-to-own or lease-to-own offers. Buying an item through weekly payments? Use the cash price as the starting amount and the total cost at the end of the contract as the final balance.

Tips for interpreting the result

• A higher rate is great for savings but bad for borrowing.
• Always compare the effective annual yield rather than just the nominal rate when different products use different compounding rules.
• Remember that taxes, account fees and inflation are not reflected in the raw interest rate.

Frequently asked questions

What is a good savings interest rate today?

It depends on your location and risk tolerance. Online banks and money markets tend to pay more than traditional branch accounts. Use this calculator to compare real returns between providers.

Can the interest rate be negative?

Yes. A negative result simply means the ending balance is lower than the starting amount. This can happen with account fees, deflation in asset prices or intentionally discounted loans.

Does it work if I make extra deposits or withdrawals?

This version assumes a single lump-sum at the start and a single value at the end. For complex cash-flow patterns, a full IRR (internal rate of return) calculator is more accurate.

Is this calculator the same as APR?

APR (annual percentage rate) is a legal definition that also includes certain fees. This tool focuses on the mathematical interest rate. It is a good approximation but not a legal disclosure.