Compound Interest Calculator
See how a starting balance and regular contributions grow over time when interest earns interest.
How compound interest works
With simple interest you earn only on your original deposit. With compound interest you also earn on the interest you have already earned, so growth speeds up over time. The formula for a single deposit is:
A = P × (1 + r ÷ n)ⁿᵗ
- P is the starting balance.
- r is the annual interest rate as a decimal (7% is 0.07).
- n is how many times a year interest is added.
- t is the number of years.
This calculator also adds your monthly contribution at the end of each month, and the contribution earns interest from the following month.
Example
Start with $10,000 and add $500 a month at 7% a year, compounded monthly, for 20 years. You put in $130,000 in total, and the balance grows to about $300,851. Roughly $170,851 of that is interest you did not have to deposit.
Why time matters more than the exact rate
Most of the growth arrives in the later years, when the balance is large. Starting ten years earlier usually does more than finding a slightly higher rate. A quick check is the rule of 72: divide 72 by the annual rate to estimate how many years it takes to double. At 7%, that is about 10 years.
Does compounding frequency matter?
Only a little. Monthly compounding earns slightly more than yearly, and daily slightly more than monthly, but the gap is small compared with the effect of the rate, the contributions and the time.
Returns on savings accounts and investments are not guaranteed, and investment returns vary from year to year. Taxes and fees are not included. Treat the result as an illustration, not a forecast.
Frequently asked questions
What is the difference between simple and compound interest?
Simple interest is calculated only on the original amount. Compound interest is calculated on the original amount plus the interest already added, so it grows faster.
What interest rate should I use?
For a savings account, use the account's stated rate. For investments, many people try a few cautious figures, such as 5%, 7% and 9%, to see a range instead of relying on a single number.
Are contributions added at the start or end of the month?
At the end of each month in this calculator. Adding them at the start would give a slightly higher result.