Compound Interest Calculator: Estimate Growth Over Time
Compound interest estimates show how interest can build on both an initial balance and previously accumulated interest. This calculator provides a mathematical scenario based on the values you enter.
How to use this tool
- Enter the starting principal.
- Enter the annual interest rate as a percentage.
- Set the number of years.
- Choose how many times interest compounds per year.
- Calculate the estimated future value and interest earned.
Options explained
More frequent compounding changes the result according to the formula shown by the selected annual rate and frequency. This estimate assumes the rate stays constant and no additional deposits or withdrawals occur.
Accuracy and limitations
Actual savings or investments may have changing rates, fees, taxes, losses, or terms. This tool is for general education and is not an investment recommendation.
Reading the formula with an example
The tool uses A = P x (1 + r/n)^(n x t). With 1,000 at 5 percent a year for 10 years and interest added once a year, the result is about 1,628.89, so the interest earned is about 628.89. The same amount compounded monthly (n = 12) grows to about 1,647.01. Interest is earned on the interest added before, and that is what makes the line curve upward over time.
Compounding frequency
Monthly compounding gives a little more than yearly compounding, daily gives a little more than monthly, and the gap gets smaller each time. Choosing a different frequency makes a small difference compared with the difference made by the rate and by the number of years. Use the frequency that your bank or product states, and check the real terms, because some accounts pay interest in a different way.
Time matters most
Leaving money for longer has a bigger effect than almost anything else. At 6 percent a year, 1,000 becomes about 1,790.85 after 10 years, about 3,207.14 after 20 years and about 5,743.49 after 30 years. A rough rule is the rule of 72: divide 72 by the yearly percentage to get the approximate number of years it takes to double, so at 8 percent about 9 years.
What the result leaves out
The calculator assumes a constant rate and no deposits or withdrawals. Real savings and investments can have changing rates, fees, taxes and losses, and inflation reduces what the money can buy. Use the number to understand how compounding works and to compare examples, not as a promise of what you will earn or as advice to buy anything.
Frequently asked questions
What is the compound interest formula?
A = P x (1 + r/n)^(n x t), where P is the starting amount, r the yearly rate as a decimal, n the number of times interest is added per year and t the number of years. Compound interest is the interest earned on the interest.
What is the difference between simple and compound interest?
Simple interest is earned only on the starting amount. Compound interest is also earned on the interest that was added before, so it grows faster over time.
How do I enter monthly compounding?
Choose 12 as the number of times interest is added per year.
Does the tool include regular deposits?
No. It assumes one starting amount and no deposits or withdrawals.
Is the result guaranteed?
No. It is an estimate with a constant rate. Real results depend on the product, fees, taxes and changes in the rate.
Read the Privacy Policy and Terms of Service before using the service.