Compound Interest Calculator
Calculate investment growth with compound interest over time.
This calculator shows how your investment grows using the compound interest formula. Enter your principal, rate, compounding frequency, and time to see the full picture.
The Power of Compound Interest
Interest on interest
Compound interest means you earn interest not just on your original principal, but also on the interest you've already accumulated. For example, 10,000 USD invested at 7% for 30 years grows to about 76,123 USD with monthly compounding — but only 31,000 USD with simple interest. That difference is entirely due to compounding.
Compounding frequency matters
The more often interest compounds, the faster your money grows. Daily compounding yields slightly more than monthly, which yields more than quarterly, which beats annual. For most savings accounts and investments, monthly is the most common frequency. The difference between daily and monthly is small, but over decades it adds up.
Common uses and a note on real returns
Compound interest applies to savings accounts, CDs, bonds, index funds, retirement accounts (401k, IRA), and loan balances. Keep in mind that this calculator shows nominal growth — real-world returns are affected by taxes, fees, and inflation. This tool is for educational planning purposes and does not constitute financial advice.
A = P × (1 + r/n)^(n×t) Frequently Asked Questions
What is compound interest?
Compound interest is interest calculated on both your initial principal and the interest already earned. Unlike simple interest, it grows exponentially over time because each period's interest adds to the base for the next period.
How does compounding frequency affect my returns?
More frequent compounding means slightly higher returns. Daily compounding beats monthly, which beats quarterly, which beats annual. For example, 10,000 USD at 5% for 10 years: annually gives 16,289 USD, monthly gives 16,470 USD, and daily gives 16,487 USD.
What is the difference between compound and simple interest?
Simple interest is always calculated only on the original principal. Compound interest is calculated on the growing balance. Over long periods, compound interest results in dramatically higher totals — the gap widens the longer the investment period.
Can I use this calculator for loans?
Yes. Loans like mortgages and credit cards also use compound interest, but in reverse — the balance you owe grows if you don't pay it down. Enter the loan amount as principal and the APR as the annual rate to see how the balance grows over time without payments.
How does this calculator help with retirement planning?
By entering your current savings as the principal and your expected annual return as the rate, you can see what your nest egg might look like at retirement age. The year-by-year table shows you exactly how and when growth accelerates.
What is the formula for compound interest?
The formula is A = P x (1 + r/n)^(n x t), where A is the final balance, 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 number of years.