Compound Interest Calculator
Model savings growth with flexible compounding (including continuous), APY calculation, and a simple-vs-compound interest comparison.
Compound interest reinvests your earnings each period, so growth accelerates over time. At 5%, $10,000 earns ~$6,289 compounded monthly over 10 years versus $5,000 with simple interest — explore the difference below.
For the annualized form of compounded growth, read CAGR explained.
Compound Interest Calculator: Make Time Your Ally
Updated April 2026
Key Points
- Compound interest pays interest on previously earned interest — the longer the horizon, the larger the gap vs simple interest.
- The formula is FV = PV × (1 + r/n)^(n×t), with optional annuity terms for regular contributions.
- More frequent compounding raises the effective yield (APY); continuous compounding is the theoretical maximum.
What is compound interest?
Compound interest is interest earned on both your original principal and on the interest your money has already accumulated. Each compounding period the interest is added to the balance, and the next period’s interest is calculated on the new, larger balance. Over decades the effect is the difference between modest savings and life-changing wealth.
Formula for compound interest
Future Value = PV × (1 + r/n)^(n×t), where PV is the starting balance, r is the annual nominal rate, n is the number of compounding periods per year, and t is the number of years. With regular contributions, an annuity factor is added on top to account for each deposit growing for the time remaining.
How to use the calculator
Enter your starting balance, annual interest rate, length of time, and how often interest compounds. Add an optional regular contribution if you plan to keep depositing, and pick whether contributions go in at the start or end of each period.
- Initial deposit — the principal you start with.
- Annual rate — the nominal APR; convert APY back to APR if your bank quotes APY.
- Compounding frequency — daily, monthly, quarterly, semiannual, annual, or continuous.
- Optional contributions — recurring deposit amount and frequency.
Worked example
Deposit $10,000 at 5% compounded monthly for 10 years with no additional contributions. The balance grows to about $16,470. The same deposit earning simple interest at 5% for 10 years grows only to $15,000. Compounding adds roughly $1,470 — purely from interest earned on prior interest.
APY vs APR
APR is the nominal rate before compounding. APY is the effective annual yield after compounding: APY = (1 + r/n)^n − 1. A 5% APR compounded monthly equals about 5.12% APY. Always compare savings products on APY, not APR — APY normalizes for differences in compounding frequency.
How to use compound interest in planning
Start as early as you can — time is the most valuable input in the formula. Even modest contributions deposited consistently from your 20s outperform much larger deposits started in your 40s. Reinvest interest rather than withdrawing it. Choose accounts with higher APY when comparable in safety.
Limitations
The calculator assumes a fixed nominal rate, which real-world savings accounts almost never deliver — bank rates float with market conditions. Inflation erodes the real value of nominal returns; a 5% nominal return with 3% inflation is a 2% real return. Tax on interest reduces effective compounding for taxable accounts.
Time + consistency beats market timing
Compound interest rewards patience. The math is unforgiving — you cannot manufacture decades of compounding after the fact — so the single biggest decision is to start now and contribute consistently.
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Frequently asked questions
What is compound interest?
Compound interest is “interest on interest.” Each period the earned interest is added to your principal, so the next period’s interest is calculated on a larger base. Over long horizons the effect is dramatic—$10,000 at 5% grows to $16,289 in 10 years with compound interest versus only $15,000 with simple interest. The Rule of 72 offers a quick mental shortcut: divide 72 by the rate to estimate doubling time.
What is the compound interest formula?
FV = PV × (1 + r/n)^(n×t), where PV is the present value, r is the annual nominal rate, n is the number of compounding periods per year, and t is the number of years. When you add regular deposits, an annuity factor extends the formula. This calculator handles both ordinary annuity (end-of-period) and annuity due (beginning-of-period) contributions.
What is the difference between simple and compound interest?
Simple interest pays a flat amount each period based on the original principal only. Compound interest reinvests earnings, so growth accelerates. For example, $10,000 at 5% for 10 years earns $5,000 in simple interest but approximately $6,289 when compounded monthly. The "Simple vs compound" widget above this section shows this gap for your inputs.
When is compound interest used?
Savings accounts, CDs, money-market funds, and bonds all use compound interest. Mortgages and auto loans also compound—in that case compounding works against the borrower. Understanding how compounding frequency (daily, monthly, quarterly) affects the effective yield (APY) helps you compare financial products on equal terms.
What is the Rule of 72?
A shortcut to estimate how long it takes to double your money: divide 72 by your annual interest rate. At 6%, money doubles in roughly 12 years. Try our Rule of 72 Calculator for exact comparisons.
How much interest will I earn on $10,000?
At 4.5% compounded monthly with no deposits: 1 year → ~$10,459; 3 years → ~$11,438; 5 years → ~$12,508; 10 years → ~$15,648. Adding regular deposits increases these totals significantly.
How much compound interest on $50,000 for 10 years?
At 4.5% compounded monthly, $50,000 grows to approximately $78,240 without additional deposits. With $200 monthly contributions the total reaches roughly $108,500.
What is APY vs APR?
APR is the nominal annual rate before compounding. APY (Annual Percentage Yield) accounts for compounding: APY = (1 + r/n)^n − 1. A 4.5% APR compounded monthly equals approximately 4.59% APY.
How often should interest compound?
Banks often compound daily or monthly. More frequent compounding slightly increases effective yield. The calculator lets you switch between compounding frequencies — daily, monthly, quarterly, semiannually, annually, or continuously — to compare their effect on your total balance.
What is continuous compounding?
Continuous compounding is the theoretical limit of compounding frequency—interest is calculated and added to the balance at every instant. The formula is FV = PV × e^(rt), where e is Euler’s number (~2.718). In practice, no bank compounds truly continuously, but daily compounding is very close. The calculator includes a “Continuously” option so you can see the theoretical maximum growth and compare it with monthly or quarterly compounding.
What is the difference between this and the investment growth calculator?
This compound interest calculator focuses on savings products—it offers APY calculation, continuous compounding, and a simple-vs-compound interest comparison. The investment growth calculator targets long-term portfolio planning with features like tax on interest, inflation adjustment, and a “what if you started 5 years earlier” scenario. If you are modeling a savings account or CD, stay here. For investment portfolio projections, try the investment growth calculator.
What is the difference between a savings account and a CD?
A savings account offers flexible access to your funds with a variable interest rate. A Certificate of Deposit (CD) locks your money for a fixed term—typically 3 months to 5 years—in exchange for a guaranteed, often higher, rate. Both use compound interest. Use this calculator to compare outcomes at different rates and terms to decide which fits your goals.
How can I maximize my compound interest earnings?
Start with the highest APY available, choose more frequent compounding when possible, add regular deposits even if small, and extend your time horizon. The most powerful factor is time—starting earlier gives compounding more cycles to accelerate growth. Even a modest increase in rate or contributions compounds significantly over decades.
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