Compound Interest Calculator
Growth over time, with your choice of compounding frequency.
Calculate compound interest growth on a principal amount over time, with a choice of compounding frequency, and see how much more it earns compared to simple interest.
How compound interest works
With simple interest, you earn interest only on the money you started with. With compound interest, each period's interest is added to the balance, and the next period's interest is calculated on that larger amount — so you earn interest on your interest. The formula is:
A = P × (1 + r ÷ n)n × t
where P is the starting amount, r the annual rate as a decimal, n the number of times interest compounds per year, and t the number of years.
Worked example
$10,000 at 7% for 10 years, compounded monthly:
- Final amount: $20,096.61
- Total interest earned: $10,096.61
- Simple interest over the same period would be only $7,000, so compounding earns $3,096.61 more.
How compounding frequency changes the result
| Compounding | After 10 years | Interest earned |
|---|---|---|
| Annually | $19,671.51 | $9,671.51 |
| Quarterly | $20,015.97 | $10,015.97 |
| Monthly | $20,096.61 | $10,096.61 |
| Daily | $20,136.18 | $10,136.18 |
All four use $10,000 at 7%. More frequent compounding helps, but the rate and the length of time matter far more.
Time is the biggest factor
The same $10,000 at 7% compounded monthly grows to about $20,097 in 10 years, $40,387 in 20 years and $81,165 in 30 years. Each extra decade roughly doubles the balance, which is why starting early matters so much for savings and retirement.
Frequently asked questions
What formula does this use?
A = P(1 + r/n)^(nt), where P is the principal, r is the annual interest rate, n is how many times per year interest compounds, and t is the time in years.
Does compounding frequency really matter?
Yes, though the effect is usually modest — the same rate compounded monthly earns slightly more than compounded annually, since interest starts earning its own interest sooner.
How long does it take money to double?
A quick estimate is the Rule of 72: divide 72 by the annual interest rate. At 7%, money doubles in about 72 ÷ 7 ≈ 10.3 years. The example above shows $10,000 reaching about $20,097 after 10 years at 7% compounded monthly.
What is the difference between APR and APY?
APR is the stated yearly rate before compounding. APY (annual percentage yield) includes the effect of compounding, so it is slightly higher when interest compounds more than once a year. Savings accounts usually advertise APY.
Does this include regular deposits?
No — this calculator shows the growth of a single starting amount. If you add money every month, your final balance will be higher than shown.