Compound Interest Calculator
Calculate how your investment grows over time with compound interest.
Frequently Asked Questions
What is compound interest?
Compound interest adds earned interest back to the principal at each period, so future interest is calculated on a growing base. This produces exponential rather than linear growth.
What is the compound interest formula?
A = P(1 + r/n)^(nt). A = final amount, P = principal, r = annual rate (decimal), n = compounding periods per year, t = years.
Does compounding frequency matter much?
It has a small effect. Daily compounding yields marginally more than monthly, which yields more than annually. The bigger factors are the interest rate and how long you invest.
How is compound interest different from simple interest?
Simple interest only applies to the original principal. Compound interest also applies to accumulated interest, producing faster growth over time.
Can I use this for debt too?
Yes. Compound interest works the same way on debt — your balance grows if interest is accruing faster than you are paying it down. Enter your balance, rate, and time to see how much you would owe.
Compound Interest Calculator — See How Investments Grow Over Time
Compound interest is the mechanism by which money grows exponentially rather than linearly over time. Unlike simple interest, which is calculated only on your original principal, compound interest adds earned interest back to your principal at each compounding period — so you earn interest on your interest. Over long periods, this compounding effect produces dramatically larger returns than the numbers initially suggest.
Albert Einstein is often credited (probably apocryphally) with calling compound interest the eighth wonder of the world. Whether or not he said it, the mathematics back up the sentiment. A $10,000 investment at 7% annual return compounded monthly for 30 years grows to approximately $81,400 — over eight times the original investment, with $71,400 of that being pure compound growth rather than contributions.
The formula is: A = P(1 + r/n)^(nt), where P is the principal, r is the annual interest rate as a decimal, n is the number of compounding periods per year, and t is time in years.
Compounding frequency matters. Daily compounding yields slightly more than monthly, which yields slightly more than annually — but the differences are smaller than most people expect compared to the impact of the interest rate and time horizon. The dominant variables are rate and time. Starting early matters far more than picking the highest compounding frequency.
This calculator is useful for: comparing savings account options, estimating the long-term growth of index fund investments, understanding how a lump-sum investment compounds over time, and illustrating the cost of debt (compound interest works in reverse when you are the borrower).
How to Use the Compound Interest Calculator
- Enter your initial investment amount.
- Enter the annual interest rate as a percentage.
- Enter the time period in years.
- Select how often interest is compounded.
- Read the final amount, total interest earned, and the growth breakdown.
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