What is a compound interest calculator?
A compound interest calculator is an online tool that estimates how much an investment or savings account can grow when interest is added to the principal and then earns additional interest over time.
Compound Interest Calculator
Project how an initial balance and regular monthly deposits may grow through compounding over time.
Enter your growth assumptions
Choose a starting balance, contribution, rate, time horizon, and compounding frequency.
About this calculator
How to use Compound Interest Calculator, plus the formulas and logic behind the results.
Tool description
The Compound Interest Calculator estimates how savings or investments can grow when interest is earned on both the principal and previously accumulated interest, with optional recurring contributions.
How to use
- Enter your starting principal, annual interest rate, and time period.
- Choose how often interest compounds.
- Optionally add a regular contribution amount.
- Select Calculate to view ending balance, interest earned, and related results.
Formulas & reference
A = P(1 + r/n)^(nt) for compound growth without contributionsFuture value of an annuity for recurring end-of-period depositsEffective annual rate depends on compounding frequency
Why compounding matters
- Returns can earn additional returns
- More time increases the effect
- Regular deposits build principal
- Rates are assumptions, not guarantees
Calculation logic
The calculator compounds the starting balance using the selected frequency, then adds the future value of periodic contributions when provided. Results exclude taxes and fees unless you adjust inputs yourself.
Contributions are assumed at the end of each month. Taxes, fees, and market volatility are excluded.
Compound Interest Calculator FAQ
Common questions about the calculation and how to interpret the estimate.
How does compound interest work?
Compound interest allows you to earn interest on both your original principal and the interest that has already been accumulated. Over time, this can cause your money to grow faster than with simple interest.
What is the compound interest formula?
The basic compound interest formula is A = P(1 + r/n)^(nt), where A is the final amount, P is the principal, r is the annual interest rate, n is the number of compounding periods per year, and t is the number of years.
What is the difference between compound interest and simple interest?
Simple interest is calculated only on the original principal, while compound interest is calculated on the principal plus previously accumulated interest. Compound interest can therefore produce greater growth over longer periods.
How often can interest be compounded?
Interest may be compounded annually, semi-annually, quarterly, monthly, daily, or at other intervals depending on the financial product. More frequent compounding can increase the effective return when other factors remain the same.
How does compound interest affect savings?
Compound interest can significantly increase savings over time because the interest earned is added to the account balance and can then earn additional interest. The effect becomes more noticeable over longer periods.
Does compound interest include regular contributions?
Some compound interest calculators allow you to include recurring contributions. Adding money regularly can substantially increase the final balance because both the existing balance and new contributions have more time to earn interest.
How does the interest rate affect compound growth?
A higher interest rate generally produces faster compound growth. Even a small difference in the annual rate can have a significant effect on the final balance when money is invested or saved for many years.
How does the investment period affect compound interest?
The longer money remains invested, the more opportunities there are for interest to compound. Time is one of the most important factors in long-term compound growth.
What is the effective annual rate?
The effective annual rate, or EAR, reflects the actual annual return after taking the compounding frequency into account. It can be higher than the stated nominal interest rate when interest compounds more than once per year.
Can I use a compound interest calculator for investments?
Yes. A compound interest calculator can estimate the future value of an investment based on the initial amount, interest rate, compounding frequency, investment period, and optional recurring contributions.
Is compound interest calculated before or after taxes?
A basic compound interest calculator usually calculates growth before taxes and fees unless those factors are specifically included. Actual investment returns may be lower after taxes, fees, and other costs.