Compound Interest Calculator
Project how a balance grows over time with compound interest and regular contributions.
Learn how it works: How Does Compound Interest Work?Enter your starting amount, rate, and time to project growth.
How to use the compound interest calculator
Set a starting amount, decide whether to add to it each month, then tell the calculator your rate, your time horizon, and how often interest is added. The projected balance updates as you go.
- Enter your initial amount. Zero is fine if you start from scratch.
- Add a monthly contribution, or leave it blank for none.
- Type the annual interest rate and the number of years.
- Pick how often interest compounds, then read the final balance, the split between your money and earned interest, and the year-by-year table.
What is compound interest?
Compound interest is interest that earns interest. After the first period, your balance includes the interest already paid, so the next round of interest is calculated on a slightly larger base. Repeat that over many periods and the growth picks up speed, because each gain feeds the next one.
The effect is modest at first and far more noticeable over long spans. A balance that creeps up in the early years can climb steeply later, which is why time in the account matters so much. Regular contributions add fuel by raising the base that compounding works on.
Compound vs simple interest
Simple interest is paid only on your original principal. Put $10,000 at 5% simple interest and you earn $500 every year, no more, no less, for a flat $5,000 over a decade.
Compound interest pays on the principal plus the interest already credited. That same $10,000 at 5% compounded annually grows past $16,000 in ten years, because each year's interest joins the balance and earns its own interest the next year. The longer the run, the wider the gap between the two methods.
How compounding frequency affects growth
Frequency is how often interest is added to the balance. Annual compounding credits interest once a year. Monthly compounding credits a twelfth of the rate twelve times a year, so interest starts earning interest sooner.
More frequent compounding raises the final balance, though by smaller steps as you go from annual to monthly to daily. The rate and the time horizon move the result far more than the frequency does, so do not over-weight this setting when you compare options.
The compound interest formula
The core formula is:
A = P(1 + r/n)ᵢᵗ
P is the principal, r is the annual rate as a decimal, n is the number of times interest compounds per year, and t is the number of years. Place $10,000 at 7% compounded monthly for 10 years and the balance reaches $20,096.61, without adding a cent along the way. When you make regular contributions, the calculator adds their future value on top.
This is a projection at a fixed rate. Real savings and investment returns vary year to year and are never guaranteed, so use the result to understand the shape of growth, not as a forecast of any specific account.
Frequently asked questions
- What is compound interest in simple terms?
- It is interest paid on both your original money and the interest you have already earned. Because each gain is added to the balance, the next round of interest is a little larger, and growth speeds up over time.
- How often should interest compound?
- More frequent compounding gives a slightly higher balance, so monthly beats annual. The difference is small, though. The interest rate and how long you stay invested matter far more than the frequency.
- What is the difference between compound and simple interest?
- Simple interest is paid only on the principal, so it grows in a straight line. Compound interest is paid on the principal plus past interest, so it grows faster the longer you leave it alone.
- Does compound interest work for debt too?
- Yes, and it can work against you. Credit cards and some loans compound the interest you owe, so an unpaid balance grows the same way savings do. Paying it down quickly keeps that growth in check.
- Are the results guaranteed?
- No. The calculator assumes a steady rate, but real returns change from year to year and can be negative. Treat the projection as a planning aid, not a promise of any particular outcome.
- Should I use this to choose an investment?
- It is a good way to see how growth and contributions interact, but it is not investment advice. For decisions about real accounts, speak with a qualified financial adviser who knows your situation.