Compound Interest Calculator – Grow Your Savings Over Time
Our compound interest calculator helps you estimate how your savings or investments grow over time when interest is earned on both your principal and accumulated interest. Whether you're planning for retirement, building an emergency fund, or evaluating investment options, understanding compound interest is essential to making smart financial decisions. Simply enter your starting balance, interest rate, compounding frequency, and time horizon to see your money grow.
The initial amount of money you are investing or depositing.
The yearly interest rate as a percentage.
The number of years (or months, depending on your selection) the money is invested.
Choose whether the time period is in years or months.
How often interest is compounded per year.
Optional: additional amount you contribute each month.
Your results will appear here
How to Use This Calculator
1. Enter your Principal Amount — the initial sum of money you are investing or saving. 2. Input the Annual Interest Rate as a percentage (e.g., 7 for 7%). 3. Set the Time Period and choose whether it represents years or months. 4. Select how frequently interest is compounded — annually, semi-annually, quarterly, monthly, or daily. 5. Optionally, enter a Monthly Contribution if you plan to add money regularly. 6. View your results instantly: Future Value, Total Interest Earned, Total Contributions, and the Effective Annual Rate.
How Compound Interest Works
Compound interest is the process of earning interest on both your original principal and the interest that has already been added to your account. Unlike simple interest, which only applies to the principal, compound interest accelerates growth over time — a phenomenon often called the "eighth wonder of the world."
The Compound Interest Formula
The standard formula for compound interest is:
A = P × (1 + r/n)nt
- A = Future value of the investment
- P = Principal (initial investment)
- r = Annual interest rate (decimal form)
- n = Number of times interest compounds per year
- t = Time in years
With Regular Contributions
When you make regular monthly contributions, the future value of those contributions is calculated using the future value of an annuity formula. The total future value is the sum of the compounded principal and the compounded contributions.
Effective Annual Rate (EAR)
The Effective Annual Rate (EAR) represents the true annual return after accounting for compounding. It is calculated as:
EAR = (1 + r/n)n − 1
For example, a 6% rate compounded monthly yields an EAR of approximately 6.168%, meaning you effectively earn slightly more than the nominal rate each year.
Compounding Frequency Matters
The more frequently interest compounds, the more you earn. Daily compounding produces slightly more growth than monthly, which produces more than annual compounding. Over long periods, this difference can be significant.
The Power of Time
Time is the most powerful variable in compound interest. Doubling your interest rate increases your return, but doubling your time period can increase your balance exponentially. Starting early — even with a small amount — often outperforms starting later with larger contributions.