Home › Finance › Compound Interest Calculator
Compound Interest Calculator
See how savings grow when interest earns interest. Enter a starting amount, an annual rate, how often interest compounds, and an optional monthly contribution — the future value, total interest, and year-by-year growth update instantly. Results are estimates: they assume a fixed rate and no taxes or fees.
How it works
Compound interest grows on both the original amount and the interest already earned. The classic formula for a lump sum is A = P(1 + r/n)nt, where P is the starting amount, r the annual rate, n the number of compounding periods per year, and t the years. This calculator simulates month by month instead, so monthly contributions fit in naturally: each month the balance grows by the equivalent monthly rate (derived from the nominal rate and frequency) and then the contribution is added. The effective annual rate — what the money really earns in a year after compounding — is (1 + r/n)n − 1 (or er − 1 for continuous compounding). Worked example: $10,000 at 5% compounded monthly for 10 years, no contributions: A = 10,000 × (1 + 0.05/12)120 = $16,470.09, of which $6,470.09 is interest. Add $100/month and the same 10 years end at $31,998.32 ($12,000 of contributions plus $9,528.23 of interest on them). The Rule of 72 gives a quick doubling check: 72 ÷ 5 ≈ 14.4 years.
Frequently asked questions
How is this different from simple interest?
Simple interest pays only on the original amount: $10,000 at 5% for 10 years earns a flat $500/year = $5,000. Compounding reinvests each year’s interest, so the same money earns $6,470.09 monthly-compounded — the gap widens every year.
Does compounding frequency matter much?
Some, but less than rate and time. On $10,000 at 5% for 10 years: annually $16,288.95, monthly $16,470.09, daily $16,486.65, continuously $16,487.21. Daily vs monthly is only about $17 here — the rate and the number of years dominate.
Are the results guaranteed?
No. This is an estimate assuming a fixed rate for the whole period. Real savings rates change, investments fluctuate, and taxes and fees reduce returns. Treat it as a planning illustration, not a promise.
What counts as a monthly contribution?
Money added at the end of each month, on top of the starting amount — for example a $100 automatic transfer into a savings account. Contributions are assumed to start in month 1.
Related calculators
Mortgage Calculator Percentage Calculator Final Grade Calculator