Compound Interest Calculator

What is a compound interest calculator?

A compound interest calculator shows you how much your money can grow when the interest you earn is added back to your balance and starts earning interest too. You enter your starting amount, how much you’ll add each month, the yearly interest rate and how many years you’ll wait. It then gives you your final balance, the money you put in yourself and the interest your money earned.

What is compound interest?

Compound interest is interest on interest. With simple interest, you’re only paid on the amount you started with. With compound interest, you’re paid on your starting amount plus all the interest already added.

Here’s an example with $1,000 at 5% for 10 years:

• Simple interest: you end up with $1,500.
• Compound interest (yearly): you end up with about $1,628.89.

The gap looks small at first, but it widens every year. The longer you leave your money alone, the more compounding does the work for you.

How to use this calculator

1. Starting amount: the money you have today.
2. Monthly deposit: what you’ll add each month. Use 0 if you’re adding nothing.
3. Interest rate: the yearly rate you expect to earn.
4. Years: how long you’ll leave the money to grow.
5. Compounded: how often interest is added, such as daily, monthly or yearly.

Click “Calculate growth” and you’ll see your final balance, the total you deposited, the interest earned and a year-by-year table.

The compound interest formula

For a lump sum with no monthly deposits, the formula is:

A = P × (1 + r/n)^(n × t)

• A is the final amount.
• P is your starting amount.
• r is the yearly interest rate as a decimal (6% becomes 0.06).
• n is how many times a year the interest compounds.
• t is the number of years.

For example, $10,000 at 6% compounded monthly for 20 years:

A = 10,000 × (1 + 0.06/12)^(12 × 20) ≈ $33,102

With monthly deposits, each deposit also grows over time. The calculator does this for you, so you don’t need to work it out by hand.

Example with monthly deposits

Say you start with $10,000 and add $200 every month at 6% compounded monthly for 20 years:

• Money you put in: $58,000
• Interest earned: about $67,500
• Final balance: about $125,500

More than half of the final balance comes from interest, not from your own deposits.

What is APY, and why does compounding frequency matter?

The more often interest is added, the more you earn. A rate of 6% compounded monthly is actually worth about 6.17% over a full year. That real yearly figure is called the APY (annual percentage yield). When you’re comparing savings accounts or CDs, always compare the APY, not just the stated rate. The “Compare rates” tab converts between compounding schedules so you can compare offers fairly.

Advantages of using a compound interest calculator

• See the long-term picture. Watch small deposits turn into a large balance over time.
• Compare options quickly. Test different rates, deposit amounts and time frames in seconds.
• Plan your goals. Work out whether you’re on track for a house deposit, an emergency fund or retirement.
• Understand debt too. Compounding works against you on credit cards and loans, and the calculator shows how fast interest can pile up.
• Skip the math. No formulas or spreadsheets needed, and the year-by-year table shows exactly how your balance changes.
• Free and instant. Nothing to sign up for.

A quick shortcut: the Rule of 72

To estimate how long it takes to double your money, divide 72 by your yearly rate. At 8%, it takes about 9 years (72 ÷ 8). It’s only a rough estimate, but it’s useful for a quick check.

Tips to get the most from compounding

• Start early. Time matters more than the amount.
• Deposit regularly. Even small monthly amounts add up.
• Leave your interest in the account. Withdrawing it stops the snowball.
• Look for higher APY and lower fees. Small rate differences add up over decades.

Things to keep in mind

This calculator assumes a fixed interest rate and deposits made at the end of each month. Real investment returns go up and down, and taxes and fees will reduce what you keep. Use the results as a planning guide, not a guarantee. This calculator is for general information only and isn’t financial advice.

FAQs

Is compound interest better than simple interest?

For savings, yes. It earns more because interest is paid on your interest. For loans, it costs you more.

How often should interest compound?

More often is better for savers. Daily beats monthly, and monthly beats yearly, though the differences get smaller as frequency rises.

Can I use this for a loan or credit card?

You can use it to see how interest grows on a balance. For an exact loan payoff, a loan or amortization calculator is more accurate.