How to calculate compound interest
- Enter the amount you start with and, if you like, what you add each month.
- Enter the annual interest rate and the number of years.
- Choose how often interest is compounded (monthly by default).
- See the final balance, the contributions and the interest, and review the year-by-year table and chart.
What is compound interest
With compound interest, the interest you earn is added to the principal and from then on it earns interest too. That's why growth speeds up over time. With 1,000 at 10% a year compounded annually, after 10 years you have 2,593.74; with simple interest it would be 2,000.
Monthly contributions make a big difference: 100 a month at 12% a year compounded monthly adds up to 1,268.25 in a year, with 1,200 contributed and 68.25 in interest. The tool assumes each contribution is made at the end of its month.
It's useful for estimating savings, certificates of deposit, investments or the growth of an unpaid debt. It's a projection with a constant rate: real investments change in yield, and taxes, fees and inflation are not included.
Things to keep in mind
- It assumes a constant rate for the whole period and contributions at the end of each month.
- It does not include taxes, fees or inflation: the real purchasing power may be lower.
- It is not financial advice or a promise of returns.
Frequently asked questions
How is compound interest calculated?
Each period the rate is applied to the balance (principal plus interest already earned). With annual compounding: principal × (1 + rate)^years.
What's the difference between simple and compound interest?
With simple interest, interest is always calculated on the initial principal. With compound interest it's calculated on the principal plus the accumulated interest, so it grows more.
What does compounding frequency mean?
It's how often interest is added to the principal: the more often, the more it grows, although the difference is small.
Can I calculate with monthly contributions?
Yes: enter the monthly contribution. It's added at the end of each month and also earns interest.
Is my data saved?
No. Everything is calculated in your browser.