📈 Compound Interest Calculator

Use this compound interest calculator to see how your savings or investments can grow over time. Enter your starting balance, interest rate, time horizon, compounding frequency, and optional regular contributions to estimate your future balance and total interest earned.

Compound interest results

Enter a starting balance, interest rate, time horizon, and compounding frequency above, then select Calculate Compound Interest to see your estimated final balance, total contributions, total interest earned, and effective annual rate.

Year-by-year compound interest breakdown

Once you calculate results, this section will show a year-by-year summary of your balance, interest earned, and contributions. This makes it easier to see how compounding accelerates growth over longer time horizons.

Compound interest calculator inputs and key terms

These inputs describe your savings or investment plan and how the financial institution applies interest to your balance.

• Starting balance (initial deposit): The amount you deposit at the beginning. This is your initial principal and forms the base on which interest is calculated.
• Annual interest rate (%): The nominal yearly rate paid on your balance, not yet adjusted for compounding. A higher rate generally leads to faster growth over time.
• Time horizon (years): How long you plan to keep the money invested or in the account. The longer the time frame, the more opportunities interest has to compound.
• Compounding frequency: How often interest is credited to your balance. Common options include annual, semiannual, quarterly, monthly, and daily compounding. More frequent compounding usually leads to a higher effective return at the same nominal rate.
• Regular contribution each compounding period: An optional deposit you add at the end of every compounding period (for example, every month with monthly compounding). Consistent contributions can dramatically increase your ending balance over time.
• Total contributions: The sum of your initial deposit plus all regular contributions over the full time horizon.
• Total interest earned: The difference between your final balance and total contributions. This shows how much of your ending balance comes from the power of compounding.
• Effective annual rate (EAR): The interest rate you effectively earn over a year once compounding is taken into account. It is often higher than the nominal rate when compounding happens more than once per year.

Formulas used in the Compound Interest Calculator

This calculator uses standard compound interest formulas and a simple period-by-period simulation to handle both your initial deposit and any regular contributions made each compounding period.

Basic compound interest formula (no regular contributions)

When you have a single initial deposit and no additional contributions, the future value after t years is:
A = P × (1 + r / n)n × t
where:

• P = initial principal (starting balance)
• r = nominal annual interest rate (decimal), so 5% is 0.05
• n = number of compounding periods per year
• t = number of years
• A = amount after t years

Regular contributions each compounding period

When you make the same contribution at the end of every compounding period, the future value of the contributions can be expressed using the future value of an annuity formula. For a contribution amount C every period:
FVcontrib = C × ((1 + r / n)n × t − 1) ÷ (r / n)
The total future value is approximately:
A = P × (1 + r / n)n × t + FVcontrib

In practice, this calculator uses a period-by-period approach that mirrors common account behavior:
1. Start each period with the current balance.
2. Apply interest for that period.
3. Add the regular contribution at the end of the period.
This makes it easier to build the year-by-year breakdown you see in the table above.

Effective annual rate (EAR)

The effective annual rate shows the true annual return after compounding:
EAR = (1 + r / n)n − 1
where r is the nominal annual rate and n is the number of compounding periods per year.

These formulas provide estimates and assume a constant interest rate and regular contribution pattern. Real-world results can be affected by changing rates, fees, taxes, and timing differences in when deposits and interest credits occur.

Compound Interest Calculator FAQs

• What is compound interest, and how is it different from simple interest?
  Simple interest is calculated only on your original principal, while compound interest is calculated on your principal plus any interest that has already been added to the account. With compounding, interest can earn interest, which is why balances grow faster over time compared with simple interest at the same nominal rate.
• How does compounding frequency affect my final balance?
  The more often interest is compounded, the more frequently your balance is updated, which slightly increases the growth of your savings. For example, money compounded monthly will typically grow more than money compounded annually at the same nominal rate. The difference becomes more noticeable at higher rates and longer time horizons.
• What is the difference between the nominal rate and the effective annual rate?
  The nominal rate is the stated annual interest rate before considering compounding. The effective annual rate (EAR) shows what you actually earn in a year once compounding is taken into account. This calculator reports an EAR based on the nominal rate and the compounding frequency you choose.
• How do regular contributions affect compound interest growth?
  Regular contributions can be just as important as the interest rate. Adding money every month, quarter, or year steadily increases your principal, giving compounding more to work with. Over long periods, consistent contributions plus compound interest can create much larger balances than a one-time deposit alone.
• Is this calculator suitable for retirement or long-term savings goals?
  Yes. You can use this tool to get a rough idea of how your retirement or long-term savings might grow under different assumptions for rate of return, time horizon, and contribution schedule. However, real investment returns vary from year to year, so it is still important to review your plan regularly and talk with a financial professional if you need personalized advice.
• Why might my actual account balance differ from the calculator results?
  Financial institutions may use slightly different day-count conventions, credit interest on specific days of the month, charge fees, or withhold taxes. Investment accounts may also experience market gains and losses. This calculator uses simplified assumptions, so its output should be viewed as an estimate rather than a guarantee of future performance.