Compound Interest Calculator
- Interest earned
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- Total you put in
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- Effective annual rate
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| Year | Put in so far | Interest so far | Balance |
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Checked against: 10,000 at 6% compounded monthly for 5 years = 13,488.50; yearly = 13,382.26 Last reviewed:
Sources and method
- Compound Interest Calculator - Investor.gov (US Securities and Exchange Commission)
- Compound interest - Wikipedia
An illustration for general information, not financial advice, a quotation or an offer of credit. Figures from a lender or employer will differ.
Compound interest adds interest to the balance, so later interest is earned on earlier interest. The formula is A = P × (1 + r ÷ n)n × t: 10,000 at 6% compounded monthly for 5 years grows to 13,488.50, compared with 13,000 under simple interest.
Enter a starting amount, an annual rate and a number of years. Add a monthly contribution to see how regular saving builds up, and change the compounding frequency to compare accounts. The table under the result shows the balance at the end of every year.
How compound interest is calculated
A = P × (1 + r ÷ n)n × t
- P — the starting amount (principal)
- r — the annual interest rate as a decimal (6% = 0.06)
- n — how many times a year interest is added (12 for monthly)
- t — the number of years
With regular contributions, each deposit grows for the time it has been in the account. The calculator works month by month: it applies one month’s interest to the balance, then adds that month’s contribution.
Worked examples
A lump sum
5,000 in a savings account at 4.5% compounded monthly for 3 years: 5,000 × (1 + 0.045 ÷ 12)36 = 5,721.24. The interest is 721.24, against 675 with simple interest.
Regular saving
Nothing to start with, 200 a month at 7% for 20 years. You put in 48,000. The balance reaches about 104,185, so more than half of it is interest. The table below shows how that share grows with time.
Growth of a lump sum
| Time | 3% a year | 5% a year | 7% a year | 10% a year |
|---|---|---|---|---|
| 1 year | 10,304.16 | 10,511.62 | 10,722.90 | 11,047.13 |
| 5 years | 11,616.17 | 12,833.59 | 14,176.25 | 16,453.09 |
| 10 years | 13,493.54 | 16,470.09 | 20,096.61 | 27,070.41 |
| 20 years | 18,207.55 | 27,126.40 | 40,387.39 | 73,280.74 |
| 30 years | 24,568.42 | 44,677.44 | 81,164.97 | 198,373.99 |
Regular saving: how much is interest?
| Saving for | You put in | Final balance | Interest earned | Share that is interest |
|---|---|---|---|---|
| 5 years | 12,000 | 14,319 | 2,319 | 16% |
| 10 years | 24,000 | 34,617 | 10,617 | 31% |
| 20 years | 48,000 | 104,185 | 56,185 | 54% |
| 30 years | 72,000 | 243,994 | 171,994 | 70% |
| 40 years | 96,000 | 524,963 | 428,963 | 82% |
This is the practical meaning of “start early”. Over 40 years most of the final balance is interest; over 5 years almost none of it is.
Compounding frequency and the effective rate
Interest added more often starts earning interest sooner, but the effect is small. A nominal 6% gives an effective annual rate of 6% compounded yearly, 6.136% quarterly, 6.168% monthly and 6.183% daily. When comparing savings accounts, compare the effective rate (often shown as AER or APY) rather than the nominal one. The CAGR calculator works the other way: from a start and end value back to the effective yearly rate.
Compound interest on debt
The same arithmetic works against you on borrowing. Credit card balances and most loans charge interest on unpaid interest. The loan calculator shows how a fixed monthly payment splits between interest and principal.
Common mistakes
- Multiplying the rate by the years. 6% for 10 years is about 79% growth compounded yearly, not 60%.
- Mixing periods. With monthly compounding, use r ÷ 12 and t × 12 together.
- Treating expected investment returns as guaranteed. Savings rates are fixed or variable; market returns are not a rate at all, and can be negative in any given year.
- Ignoring fees. A 1% annual fee on a 7% return cuts the growth rate to about 6%, which compounds into a large gap over decades.
This calculator is for illustration and general information. It is not financial advice.
Frequently asked questions
What is the compound interest formula?
A = P × (1 + r ÷ n)n × t, where P is the starting amount, r the annual rate as a decimal, n the number of times interest is added each year, and t the number of years. 10,000 at 6% compounded monthly for 5 years is 10,000 × 1.00560 = 13,488.50.
How much difference does compounding frequency make?
Less than most people expect. At 6% for 5 years, 10,000 grows to 13,382.26 compounded yearly and 13,488.50 compounded monthly. Daily compounding adds only a few more. The rate and the time matter far more than the frequency.
How are monthly contributions handled?
Each contribution is added at the end of the month and then earns interest from the following month. Interest is applied at the monthly rate equivalent to the compounding frequency you choose, so a yearly-compounded account still gives the correct yearly result.
What is the effective annual rate?
The rate you actually earn over a year once compounding is included: (1 + r ÷ n)n − 1. A nominal 6% compounded monthly is an effective 6.168%. Savings accounts often advertise this as AER or APY.
How long does it take to double my money?
Divide 72 by the interest rate for a quick estimate: at 6%, about 12 years. The exact figure at 6% compounded yearly is 11.9 years.
Does this include tax or inflation?
No. Interest is often taxable, and inflation reduces what the final balance will buy. Both can make a large difference over long periods, so treat the result as a before-tax, nominal figure.