Money calculator
Compound Interest Calculator
Calculate how your savings and recurring contributions can grow with compound interest.
Final balance
$0.00
Year-by-year growth
What is compound interest?
Compound interest is interest earned on both your original money and the interest that has already accumulated. That means your balance can grow faster over time because each period begins with a larger amount.
Compound interest formula
In this formula, A is the final balance, P is the initial principal, r is the annual interest rate as a decimal, n is the number of compounding periods per year, and t is the time in years. Recurring contributions are calculated separately and added after growing for the time remaining after each end-of-period deposit.
How compounding frequency works
Daily compounding applies interest 365 times per year, while monthly, quarterly, semiannual, and annual compounding apply it 12, 4, 2, and 1 time per year. With the same stated annual rate, more frequent compounding usually produces a slightly higher balance because interest begins earning interest sooner.
Compound vs. simple interest
Simple interest is calculated only on the original principal. Compound interest is calculated on the principal plus accumulated interest, so the difference becomes more noticeable with higher rates, longer time periods, and more frequent compounding.
How recurring contributions affect growth
Regular deposits increase both the money you put in and the amount that can earn interest. This calculator assumes each contribution is made at the end of its contribution period. When contribution and compounding frequencies differ, every deposit is grown for its own remaining time instead of using a same-frequency shortcut.
Worked example
A $1,000 initial investment earning 5% annually for 10 years with annual compounding and no further contributions grows to about $1,628.89. The $628.89 difference is interest earned on the original principal and accumulated interest.
Frequently asked questions
How is compound interest calculated?
Use A = P(1 + r/n)^(nt) for a single deposit. For recurring deposits, each end-of-period payment is compounded for the time it remains invested, then those future values are added to the initial deposit.
What does compounded monthly mean?
Compounded monthly means the annual rate is divided into 12 periods and interest is added to the balance at the end of each month.
Is daily compounding better than monthly?
At the same annual rate, daily compounding generally results in a slightly higher balance than monthly compounding. The difference is usually modest and depends on the rate and time.
What is the difference between simple and compound interest?
Simple interest applies only to the initial principal. Compound interest also applies to previously earned interest, which creates growth on growth.
How do monthly contributions affect compound interest?
Monthly contributions add money throughout the investment period. Earlier contributions have more time to earn interest, while the final contribution earns little or none before the ending date.
What happens if the interest rate is 0%?
The balance stays equal to the initial principal plus all contributions because no interest is earned.