A compound interest calculator shows how a deposit grows when interest is earned on both the original amount and the interest already added. The balance after t years is A = P(1 + r/n)nt, where P is the deposit, r the annual rate and n the number of compounding periods per year. For example, $10,000 at 5% compounded monthly grows to $16,470.09 in 10 years, and adding $200 a month brings it to $47,526.55.
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How to use the compound interest calculator
- Enter the starting deposit.
- Enter the annual interest rate and the number of years.
- Choose how often interest compounds: yearly, half-yearly, quarterly, monthly or daily.
- Optionally enter a monthly contribution, added at the end of each month.
- Read the final balance, the total deposited and the interest earned.
The compound interest calculator assumes a constant rate and no taxes or fees.
What is the compound interest formula?
For a single deposit:
A = P × (1 + r/n)n × t
- A = final balance
- P = principal (starting deposit)
- r = annual interest rate as a decimal (5% = 0.05)
- n = compounding periods per year (1 yearly, 4 quarterly, 12 monthly, 365 daily)
- t = years
With monthly contributions (PMT) made at the end of each month, the calculator adds the future value of those deposits:
FV of contributions = PMT × [((1 + i)m − 1) ÷ i]
where m is the number of months and i is the monthly rate that matches your compounding choice, i = (1 + r/n)n/12 − 1. With monthly compounding, i is simply r ÷ 12.
Interest earned = final balance − starting deposit − all contributions.
Compound interest calculator example with monthly deposits
Here is a typical compound interest calculator run. You invest $10,000 at 5% a year, compounded monthly, and add $200 at the end of every month for 10 years.
- Monthly rate: 0.05 ÷ 12 = 0.0041667
- Growth of the deposit: $10,000 × (1.0041667)120 = $16,470.09
- Growth of the contributions: $200 × [(1.0041667120 − 1) ÷ 0.0041667] = $31,056.46
- Final balance: $16,470.09 + $31,056.46 = $47,526.55
- You deposited $10,000 + $24,000 = $34,000, so interest earned is $13,526.55
How time changes the result
Same inputs ($10,000 start, $200 a month, 5%, monthly compounding):
| Years | Total deposited | Final balance | Interest earned |
|---|---|---|---|
| 5 | $22,000 | $26,434.80 | $4,434.80 |
| 10 | $34,000 | $47,526.55 | $13,526.55 |
| 20 | $58,000 | $109,333.14 | $51,333.14 |
| 30 | $82,000 | $211,129.17 | $129,129.17 |
Interest earned overtakes the total you deposited after about 22 years in this example. That is the practical meaning of compounding: the longer the money stays invested, the larger each year’s gain becomes.
Does compounding frequency matter?
To see how compounding frequency changes the result, enter $10,000 at 5% for 10 years, with no contributions, in the compound interest calculator:
| Compounding | Final balance | Effective annual yield (APY) |
|---|---|---|
| Yearly | $16,288.95 | 5.000% |
| Quarterly | $16,436.19 | 5.095% |
| Monthly | $16,470.09 | 5.116% |
| Daily | $16,486.65 | 5.127% |
More frequent compounding helps, but the gain from monthly to daily is small. The rate itself matters much more. When a bank quotes an APY, it already includes compounding, so compare accounts by APY, not by the nominal rate.
Compound vs simple interest
Simple interest is paid only on the original principal: interest = P × r × t. Compound interest is also paid on interest already earned.
| $10,000 at 7% | Simple interest | Compound (monthly) |
|---|---|---|
| After 10 years | $17,000 | $20,097 |
| After 20 years | $24,000 | $40,387 |
| After 30 years | $31,000 | $81,165 |
The gap widens every year, which is why time matters more than small rate differences. Use the simple interest calculator for loans or notes that do not compound.
Adjusting for inflation
The result is in future dollars. To see it in today’s money, divide by (1 + inflation)t. At 3% inflation, $40,387 in 20 years buys about what $22,361 buys today. The inflation calculator does this step for you.
Rule of 72: a quick check
Divide 72 by the annual rate to estimate how many years it takes to double your money. At 6%, money doubles in about 12 years; at 9%, about 8 years. The rule is an approximation that works best for rates between about 4% and 12%.
What the compound interest calculator does not include
- Taxes. Interest in a regular savings or brokerage account is usually taxable each year. Tax-advantaged accounts such as an IRA or 401(k) defer or avoid that drag.
- Inflation. A balance 30 years from now buys less than today. Use the inflation calculator to convert it.
- Variable returns. Stock returns are not a fixed rate. Treat a market return as an assumption, not a promise.
- Fees. Fund expense ratios and account fees reduce the effective rate.
Related converters and calculators
Related calculators and guides:
- Simple interest calculator: principal only
- Savings calculator: goal-based growth
- Future value calculator: lump sums and annuities
- Inflation calculator: today’s money
- SIP calculator: monthly investing
Sources
Investor.gov (SEC): Compound interest calculator; Investor.gov (SEC): Compound interest; FDIC Consumer Resource Center.
Questions about this calculator
What is the compound interest formula?
A = P(1 + r/n)^(nt), where P is the deposit, r the annual rate as a decimal, n the compounding periods per year and t the number of years.
How much will $10,000 grow in 10 years with compound interest?
At 5% compounded monthly, $10,000 grows to $16,470.09. At 7% it grows to about $20,097.
Does this calculator include monthly contributions?
Yes. Deposits are added at the end of each month and earn the same rate.
Is daily compounding much better than monthly?
Only slightly. On $10,000 at 5% for 10 years, daily compounding earns about $17 more than monthly.
What is the difference between APR and APY?
APR is the nominal yearly rate. APY includes the effect of compounding, so it is the better number for comparing savings accounts.
Check the assumptions and units before relying on a result. Financial, tax and health estimates do not replace advice for your individual circumstances.
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