Compound Interest Calculator
This compound interest calculator finds the future value of a deposit and the interest earned when interest is added to the balance annually, quarterly, monthly, or daily. Enter the principal, the annual rate, the years, and the compounding frequency, and the compound interest calculator returns the future value, the interest earned, and the effective annual rate.
Results
The Compound Interest Calculator is part of our Investment collection. Browse more investment to size, convert, and check your work alongside this tool.
What the compound interest calculator shows
Compound interest is interest on interest: each period the interest is added to the balance, so the next period earns on a larger amount. The compound interest calculator applies that growth over your chosen number of years and compounding frequency. It also shows the effective annual rate, the true yearly return after compounding. People also call it a cumulative interest calculator, an interest on interest calculator, or a complex interest calculator, because the interest itself keeps earning interest.
Compound interest formula
P is the principal, r the annual rate as a decimal, n the compounding periods per year, and t the years. Interest earned is A minus P. More frequent compounding gives a slightly higher effective rate for the same nominal rate.
Compound interest calculator example
$5,000 at 6 percent for 3 years, compounded annually:
Simple interest on the same terms is $900. Compounded monthly, the future value rises to $5,983.40 and the effective annual rate to 6.168 percent.
How to use the compound interest calculator
Enter the starting principal, the annual interest rate, the number of years, and how often interest compounds. The compound interest calculator returns the future value, the interest earned, the effective annual rate, and the simple interest on the same figures for comparison. Daily compounding uses 365 periods a year.
Reading the compound interest result
The future value is what the deposit grows to; the interest earned is the growth alone. The gap between compound and simple interest is small over a few years but grows quickly over decades, which is why time matters more than rate in long-term saving. Compare offers by their effective annual rate, not the nominal rate. Use the tool to estimate compound interest on savings, figure compound interest on a deposit before you open it, or find the compound interest on any balance for any period.
When to compute compound interest
- Projecting savings growth with the compound interest calculator
- Comparing daily, monthly, and annual compounding
- Finding the effective annual rate of an account
- Showing interest on interest in finance lessons
Common compound interest calculator mistakes
- Using the rate as a whole number in the exponent formula. 6% is 0.06.
- Mixing periods. Divide the rate by n and multiply the years by n.
- Comparing nominal rates only. Compare effective annual rates.
Tips for accurate results
- Start early: years matter more than small rate differences.
- Check how often your account really compounds.
- Use the effective rate to compare offers.
Compound interest calculator compounded daily
Daily compounding adds interest 365 times a year, so a compound interest calculator compounded daily gives the highest result among the common options for the same rate. The extra over monthly compounding is small, a few dollars per ten thousand each year, because each daily addition is tiny. What changes the outcome far more is the number of years and the rate itself. To see the overall gain on an investment as a single percentage, the ROI calculator compares what you put in with what you got back.
Figuring compound interest by hand
Figuring compound interest without software is a matter of repeated multiplication: multiply the balance by (1 + r/n) once for every period. Over 3 annual periods at 6 percent, that is 5,000 × 1.06 × 1.06 × 1.06. The rule of 72 gives a quick check: at 6 percent, money doubles in about 72 ÷ 6 = 12 years.
Compounding calculator reference ($10,000 at 5%, 10 years)
| Compounding | Future value | Effective rate |
|---|---|---|
| Annually | $16,288.95 | 5.000% |
| Quarterly | $16,436.19 | 5.095% |
| Monthly | $16,470.09 | 5.116% |
| Daily | $16,486.65 | 5.127% |
Compound Interest Calculator FAQ
What is the compound interest formula?
A = P × (1 + r/n)^(n × t), where r is the annual rate as a decimal, n the periods per year, and t the years.
How much more does daily compounding earn?
A little more than monthly. $10,000 at 5% for 10 years grows to about $16,487 daily versus $16,470 monthly.
What is the effective annual rate?
The actual yearly return after compounding: (1 + r/n)^n − 1.
How is compound interest different from simple interest?
Compound interest earns interest on previous interest; simple interest is charged only on the principal.