Compound Interest Calculator
This compound interest calculator shows how a starting balance grows when interest is earned on both your principal and the interest it has already generated. Enter your initial deposit, an annual interest rate, a time horizon in years, and how often interest compounds — annually, semi-annually, quarterly, monthly, or daily — and you'll instantly see your projected final balance.
You can also add a monthly contribution to model a regular savings habit, the way most people actually build wealth in a high-yield savings account, CD ladder, or index fund. The results break out your starting principal, everything you contributed along the way, and the interest your money earned on its own, so you can see exactly how much compounding is doing for you.
How it works
The calculator simulates your balance month by month. First it converts your annual rate and compounding frequency into an effective monthly rate, so daily or quarterly compounding is handled accurately. Each month, the balance grows by that rate, and then your monthly contribution (if any) is added at the end of the month. After all the months in your time horizon have run, it reports the final balance, your total contributions, and the interest earned (final balance minus principal minus contributions).
Formula
The effective monthly rate is i = (1 + r/n)n/12 − 1, where r is the annual rate as a decimal and n is the number of compounding periods per year. Each month the balance updates as B = B × (1 + i) + PMT, where PMT is the monthly contribution. With no contributions, this is equivalent to the classic formula A = P(1 + r/n)nt.
Worked example
Suppose you deposit $10,000 at 5% annual interest, compounded monthly, with no additional contributions, for 10 years. The monthly rate is 0.05 ÷ 12 ≈ 0.004167. Over 120 months, the balance grows to 10,000 × (1.004167)120 ≈ $16,470.09. Your principal is $10,000, contributions are $0, and interest earned is $6,470.09 — nearly 65% growth without adding another dollar.
This calculator is for informational purposes only, not professional advice. Projections assume a constant interest rate and do not account for taxes, fees, or inflation. Consult a qualified financial advisor before making investment decisions.
Frequently asked questions
How is compound interest different from simple interest?
Simple interest is calculated only on your original principal, so it grows in a straight line. Compound interest is calculated on the principal plus all previously earned interest, so growth accelerates over time. At 5% for 10 years, $10,000 earns $5,000 with simple interest but about $6,470 with monthly compounding — and the gap widens the longer you stay invested.
Does the compounding frequency really matter?
It matters, but less than most people expect. Moving from annual to monthly compounding at 5% lifts the effective annual yield from 5.00% to about 5.12%, and daily compounding adds only slightly more. The rate itself and the length of time you stay invested have a far bigger impact on your final balance than the compounding frequency does.
How do monthly contributions affect compound growth?
Each contribution starts its own compounding clock, so earlier deposits work harder than later ones. Adding even $100 a month can dwarf the growth of a lump sum alone: at 5% over 20 years, $100 monthly contributions grow to roughly $41,000 despite only $24,000 being deposited. This calculator adds contributions at the end of each month, a common savings-account convention.
What is a realistic interest rate to use?
It depends on where the money sits. High-yield savings accounts have recently paid roughly 4-5% APY, CDs are similar, and diversified stock index funds have historically averaged about 7-10% per year before inflation, though with significant year-to-year swings. Use a conservative rate for planning, and remember past returns never guarantee future results.
How long does it take money to double with compound interest?
A quick estimate is the Rule of 72: divide 72 by your annual interest rate to get the approximate doubling time in years. At 6%, money doubles in about 12 years; at 9%, about 8 years. The rule is an approximation that works best for rates between roughly 4% and 12% — this calculator gives you the exact figure.