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Compound Interest Calculator
Calculate compound interest and see how your investment grows over time — free online compound interest calculator.
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Compound Interest Calculator
Enter your initial amount, interest rate, time period, compounding frequency, and optional monthly contributions to see your final balance and a year-by-year breakdown. Results update instantly as you type.
What is compound interest?
Compound interest means you earn interest on both your principal and the interest already accumulated. Over time this creates exponential growth — often called "the eighth wonder of the world." The more frequently interest compounds (daily vs. annually), the faster the balance grows.
The compound interest formula
A = P(1 + r/n)nt where P is the principal, r is the annual rate (as a decimal), n is compounding periods per year, and t is time in years.
Common uses
- Projecting the future value of savings accounts, ISAs, or investment portfolios
- Comparing savings accounts with different compounding frequencies
- Understanding the long-term effect of regular monthly contributions
- Calculating how much debt grows if left unpaid
Frequently Asked Questions
What is compound interest?
Compound interest means you earn interest on both your original principal and the interest already accumulated. This creates exponential growth over time — the longer you leave money invested, the faster it grows.
What is the compound interest formula?
A = P(1 + r/n)nt, where A is the final balance, P is the principal, r is the annual rate as a decimal, n is compounding periods per year, and t is time in years. With regular contributions, a future value of annuity component is added.
What is the Rule of 72?
The Rule of 72 estimates how long it takes to double an investment: divide 72 by your annual interest rate. At 8% per year, money doubles in roughly 9 years (72 ÷ 8). It is a quick mental shortcut for comparing investment options.
How does compounding frequency affect my balance?
More frequent compounding — daily versus monthly versus annually — produces a slightly higher final balance. The difference is modest at typical savings rates but can be meaningful over decades or at higher rates.
What is the difference between APR and APY?
APR (Annual Percentage Rate) is the stated annual rate before compounding is applied. APY (Annual Percentage Yield) is the effective annual return after compounding. When comparing savings accounts, use APY for a fair comparison.
How much do regular monthly contributions change the result?
Regular contributions have a dramatic effect over long periods. Adding $200/month to an initial $1,000 at 7% over 30 years produces roughly $227,000 — far more than the ~$7,600 the lump sum alone would grow to. Consistent contributions often matter more than the initial deposit.