Compound Interest Calculator
Calculate compound interest
How to Use This Calculator
- 1
Enter starting principal
Current balance or initial deposit.
- 2
Set annual rate and years
Use expected annual return or savings APY and investment horizon.
- 3
Pick compounding frequency
Monthly compounding is common for savings; daily for some accounts.
- 4
Read future value
Compare interest earned vs. principal contributed.
How It Is Calculated
Compound interest reinvests earned interest so growth accelerates over time—the basis of long-term investing and savings.
A = P(1 + r/n)^(nt) where A = final amount, P = principal, r = annual rate, n = periods per year, t = years
Worked examples
$10,000 at 5%, 10 years
Compounded monthly → about $16,470; roughly $6,470 interest earned.
Rate sensitivity
7% vs. 5% on $10k for 20 years can mean tens of thousands more at maturity.
Time effect
Most growth often occurs in later years because interest earns on a larger base.
When to Use This Calculator
- Projecting retirement or college savings
- Comparing bank CDs and high-yield savings
- Teaching the Rule of 72 and exponential growth
- Estimating bond or fund returns (simplified)
- Showing why starting early matters
Common Mistakes to Avoid
- Using nominal return without adjusting for inflation or taxes
- Assuming returns are guaranteed year after year
- Ignoring ongoing contributions (use the investment calculator for deposits)
- Mixing up annual rate with periodic rate when n changes
Frequently Asked Questions
What is compound interest?
Compound interest is interest calculated on the initial principal and on accumulated interest from previous periods. Growth accelerates over time because you earn returns on a larger balance.
How often should savings compound?
Common frequencies are daily, monthly, quarterly, or annually. More frequent compounding slightly increases effective yield at the same nominal rate.
How is compound interest different from simple interest?
Simple interest applies only to the original principal. Compound interest reinvests earned interest, so the balance grows faster over long horizons.
Does this include regular contributions?
This page models a single lump sum. Use the investment calculator to add periodic deposits or withdrawals.
Are results guaranteed?
No. Market returns, bank rates, fees, and taxes change over time. Use projections for planning, not guaranteed outcomes.