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Compound Interest Calculator

This compound interest calculator shows how an initial deposit and regular monthly contributions grow over time when interest is compounded daily, monthly, quarterly or annually. It gives the future balance, the interest earned and a year-by-year breakdown.

Added at the end of each month. Enter 0 for none.

Result

Future balance: $37,405.09

Total deposits$22,000.00
Interest earned$15,405.09
Effective annual yield (APY)7.229%

Results update as you type.

Growth by year
YearDepositsInterestBalance
1$1,200$762$11,962
2$1,200$904$14,066
3$1,200$1,056$16,322
4$1,200$1,219$18,741
5$1,200$1,394$21,336
6$1,200$1,582$24,117
7$1,200$1,783$27,100
8$1,200$1,998$30,298
9$1,200$2,230$33,728
10$1,200$2,477$37,405

How Compound Interest Works

With simple interest you earn interest only on the money you put in. With compound interest, the interest is added to the balance and then earns interest itself. The longer the money is left, the larger the share of the balance that comes from interest rather than deposits.

The Compound Interest Formula

Initial deposit

A = P × (1 + r/n)^(n × t)

  • A = balance at the end
  • P = initial deposit
  • r = annual interest rate as a decimal (7% = 0.07)
  • n = compounding periods per year (1 annually, 4 quarterly, 12 monthly, 365 daily)
  • t = years

Monthly contributions

FV = PMT × ((1 + g)^m − 1) ÷ g

  • PMT = monthly contribution
  • m = number of months (years × 12)
  • g = monthly growth rate. With monthly compounding, g = r ÷ 12. For other frequencies, g = (1 + r/n)^(n/12) − 1, the monthly rate that gives the same growth over a year.

The future balance is the two parts added together.

Effective annual yield (APY)

APY = (1 + r/n)^n − 1

Worked Example

$10,000 invested at 7% compounded monthly, plus $100 a month, for 10 years:

  1. Monthly rate: 0.07 ÷ 12 = 0.0058333
  2. Months: 10 × 12 = 120
  3. Growth factor: 1.0058333^120 = 2.0097
  4. Initial deposit: 10,000 × 2.0097 = $20,096.61
  5. Contributions: 100 × (2.0097 − 1) ÷ 0.0058333 = $17,308.48
  6. Future balance: 20,096.61 + 17,308.48 = $37,405.09

You deposited $10,000 + 120 × $100 = $22,000, so $15,405.09 is interest. The APY at 7% compounded monthly is 7.229%.

Tips for Using the Calculator

Time matters more than frequency

Doubling the number of years has a far bigger effect than switching from monthly to daily compounding. Starting earlier, even with smaller deposits, usually leaves you with more.

Use a realistic rate

For a savings account or CD, use the rate the bank quotes. For long-term investments, remember that returns vary from year to year; try a few rates to see a range rather than relying on one projection.

Inflation and taxes

The result is in future dollars before tax. Interest in a regular savings account is usually taxable each year, and inflation reduces what the balance will buy.

Borrowing works the other way

Compounding also works against you on debt. See how interest adds up on a card balance with the credit card payoff calculator, or check loan costs with the loan calculator.

Frequently Asked Questions

What is compound interest?

Compound interest is interest paid on both the original amount and the interest already earned, as Investor.gov defines it. Each time interest is added, the next round of interest is calculated on a larger balance, so growth speeds up over time.

What is the formula for compound interest?

A = P × (1 + r/n)^(n × t), where P is the starting amount, r is the annual rate as a decimal, n is the number of times interest is compounded per year and t is the number of years. $1,000 at 5% compounded annually for 10 years grows to 1,000 × 1.05^10 = $1,628.89.

How much will $10,000 grow in 10 years?

It depends on the rate. At 5% compounded monthly, $10,000 grows to about $16,470 in 10 years. At 7% it grows to about $20,097. Adding $100 a month at 7% brings the total to about $37,405, of which $22,000 is your own deposits.

Does compounding frequency make a big difference?

Less than the rate or the time. $10,000 at 5% for 10 years grows to $16,289 with annual compounding, $16,470 with monthly and $16,487 with daily. The effective annual yield (APY) shows the difference in one number. 5% compounded monthly is an APY of about 5.12%.

What is the Rule of 72?

A quick way to estimate how long it takes money to double. Divide 72 by the annual interest rate. Investor.gov's example is that at 9%, money doubles in about 72 ÷ 9 = 8 years. It's an approximation and works best for rates between about 4% and 12%.

What is the difference between APR and APY?

The APR is the yearly rate before compounding, and the APY is the yield including compounding over a year. Under the Truth in Savings rules, banks quote savings accounts with an APY. Enter the stated interest rate here; the calculator shows the APY it produces.

Are returns on investments guaranteed?

No. The calculator assumes a fixed rate every year. Savings accounts and CDs pay a stated rate, but stock and bond returns vary from year to year and can be negative, so treat an investment projection as an illustration, not a forecast.

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