Compound interest is interest earned on both your original money and the interest it has already earned. Enter a principal, annual rate, time period and compounding frequency to see your final balance, total interest, effective annual rate and a year-by-year growth table.
Compound Interest Calculator
Calculate compound interest and see how your money grows over time.
Results are estimates for educational purposes and are not financial advice. Actual returns depend on your provider's terms, fees and taxes.
Compound interest formula
A = P × (1 + r/n)n × t | CI = A − P
- A
- Final amount after compounding.
- P
- Initial principal.
- r
- Annual (nominal) interest rate as a decimal — 5% is 0.05.
- n
- Compounding periods per year: 365 daily, 12 monthly, 4 quarterly, 2 semi-annually, 1 annually.
- t
- Time in years (months ÷ 12).
- CI
- Compound interest earned.
The calculator also shows the effective annual rate (often called APY), which is the yearly growth once compounding is included: APY = (1 + r/n)n − 1.
How to use the compound interest calculator
- Enter the initial principal.
- Enter the annual interest rate quoted by your bank or investment.
- Enter the investment period in years or months. Fractions such as 2.5 years are allowed.
- Choose the compounding frequency from your account terms.
- Press Calculate. Hover over or tap the chart bars for exact values, open the year-by-year table, and use Download CSV to keep the schedule.
Worked example
You invest $10,000 at 5% per year, compounded monthly, for 10 years.
- Values: P = 10,000, r = 0.05, n = 12, t = 10.
- Rate per period: r/n = 0.05 ÷ 12 = 0.0041667.
- Number of periods: n × t = 12 × 10 = 120.
- Growth factor: (1.0041667)120 = 1.647009.
- Final amount: A = 10,000 × 1.647009 = $16,470.09.
- Compound interest: 16,470.09 − 10,000 = $6,470.09.
The effective annual rate is 5.1162%. With simple interest the same money would earn only $5,000.
How compounding frequency changes the result
| Compounding | n | Final amount | Interest earned |
|---|---|---|---|
| Annually | 1 | $16,288.95 | $6,288.95 |
| Semi-annually | 2 | $16,386.16 | $6,386.16 |
| Quarterly | 4 | $16,436.19 | $6,436.19 |
| Monthly | 12 | $16,470.09 | $6,470.09 |
| Daily | 365 | $16,486.65 | $6,486.65 |
More frequent compounding helps, but the gains shrink quickly: moving from monthly to daily adds only about $17 here. The rate and the length of time matter far more.
Practical uses
- Projecting a savings account, fixed deposit or certificate of deposit balance.
- Comparing two accounts that quote the same rate with different compounding.
- Estimating the growth of a lump-sum investment at an assumed rate of return.
- Seeing how much interest a debt accrues if nothing is repaid (for example, deferred student loan interest that capitalises).
- Checking homework and exam answers step by step.
Assumptions and limitations
- One lump sum at the start, with no further deposits or withdrawals. To add regular savings, use the calculator with regular contributions.
- The rate is fixed for the whole term. Real savings rates and investment returns change.
- For fractional periods (for example 10.5 years with annual compounding) the formula is applied with a fractional exponent. A bank would usually add interest only on whole compounding dates, so its figure may be slightly lower.
- Daily compounding uses 365 periods per year.
- Taxes, account fees and inflation are not deducted. See how inflation affects savings.
Frequently asked questions
What is a good compounding frequency?
For savers, more frequent is better at the same nominal rate, but the difference between monthly and daily is small. Compare accounts by APY, which already includes compounding.
How do I calculate compound interest by hand?
Divide the annual rate by the number of periods, add 1, raise it to the power of the total number of periods, multiply by the principal and subtract the principal. Our guide How to Calculate Compound Interest walks through it.
Is the rate I enter the APR or the APY?
Enter the nominal annual rate (the rate before compounding). If you only know the APY, choose annual compounding and enter the APY — that gives the same result.
Why does my bank statement differ slightly?
Banks may use a different day count, credit interest on specific dates, round each period to the cent, or change the rate. Differences of a few cents to a few dollars are normal.
Can I calculate for months instead of years?
Yes. Choose “Months” next to the time period. 30 months is treated as 2.5 years.