Compound Interest Calculator

See how your investments grow over time with compound interest.

Principal ($)

Annual Rate %

Years

Compound Frequency

Results

Final Amount

Total Interest

Compound interest is the engine behind long-term wealth building and, on the flip side, the reason credit card debt can snowball. With simple interest, only the original principal earns interest. With compound interest, the interest itself starts earning interest in the next period, so growth is not linear, it accelerates. This is the idea often attributed (possibly apocryphally) to Albert Einstein as the 'eighth wonder of the world: he who understands it, earns it; he who does not, pays it'.

In practice, two levers drive the result: the rate and the time. A small difference in annual rate, say 6 percent versus 7 percent, looks tiny in any given year but is dramatic over 30 years, because the extra percent compounds on every previous year's gain. Time works the same way: an account started at 25 grows to roughly 5 times what the same account started at 35 grows to by age 65, even with identical contributions. That is why starting early tends to matter more than picking the 'best' fund.

The calculator below lets you stress test the inputs. Change the compounding frequency from yearly to monthly to daily and watch the result drift upward. Add a regular contribution, set the time horizon, and see what a consistent monthly deposit does on top of the base principal. Use it to compare a savings account, an index fund, a CD, or a side-hustle reinvestment plan on the same set of assumptions.

One caveat for real planning: the calculation assumes a constant rate and constant contributions, neither of which holds in real life. Markets move up and down, and a rate of 7 percent is a long-run average, not a guarantee. Use the result as a 'what if everything stays the same' view, then run the same calculation with a more conservative rate (5 or 6 percent) to see a more realistic range. The point of running the numbers is not to predict the future, it is to build intuition for how compounding behaves across decades.

How to use

Enter the starting principal, which is the lump sum already in the account or the initial deposit.
Enter the annual interest rate as a percentage (for example, 6.5, not 0.065) and the time horizon in years.
Pick a compounding frequency: annually, monthly, weekly, or daily, and add a regular contribution if there is one.
Read the final balance, total contributions, total interest earned, and the effective annual yield to compare options.

Formula

A = P × (1 + r/n)^(n × t), where P is the principal, r is the annual interest rate as a decimal, n is the number of compounding periods per year, and t is the time in years. With regular contributions C made each period: A = P × (1 + r/n)^(n × t) + C × [((1 + r/n)^(n × t) − 1) ÷ (r/n)].

Interpreting your results

The final balance is the headline number. Total interest is the amount earned on top of contributions, and the effective annual yield (APY) is what a stated nominal rate actually turns into after compounding. A savings account paying 5.0% compounded monthly yields about 5.12% APY; the same rate compounded daily is roughly 5.13%. That gap is small at low rates but grows as rates rise, which is why APY is the fairer number to compare across products.

Frequently asked questions

How long does it take for money to double with compound interest?

A handy rule is the Rule of 72: divide 72 by the annual rate to get the approximate years to double. At 6 percent the rule gives about 12 years; at 9 percent, about 8 years. It is a shortcut, not exact math, but it is close enough for quick planning.

Does compound interest account for inflation?

No, the formula is a nominal calculation. To see real (inflation-adjusted) growth, subtract an expected inflation rate from the nominal rate and re-run the calculation, or divide the final balance by an inflation factor to compare today's purchasing power.

What is the difference between simple and compound interest?

Simple interest pays interest only on the original principal. Compound interest pays interest on principal plus accumulated interest. Over short terms the gap is small, but over decades compound interest produces dramatically more growth, or dramatically more debt, depending on which side of the loan you sit on.

Is daily compounding much better than monthly?

For most consumer rates the difference is tiny, often a few basis points. It becomes meaningful at higher rates and over long horizons, or with very large balances. Frequency matters more for psychology and for products like credit cards, where daily compounding on a carried balance is exactly the feature to avoid.