How to use the compound interest calculator
- Enter your starting amount and how much you add every month.
- Type the yearly interest rate and the number of years, and choose how often interest compounds.
- Click Calculate to see your final balance and the table by year.
How compound interest works
With compound interest you earn interest on your original money and on the interest already earned. Over many years this snowball effect is powerful: the same deposit grows much faster than with simple interest.
The formula for a single deposit is A = P × (1 + r/n)n×t, where P is the amount, r the yearly rate, n the compounding periods per year and t the years. This calculator also adds monthly deposits.
Rule of 72
Divide 72 by the interest rate to estimate how many years it takes to double your money. At 6% it takes about 12 years.
Frequently asked questions
How do I calculate compound interest?
Enter the starting amount, the yearly rate, the years and any monthly deposit. The calculator applies the compounding for you.
What is the difference between simple and compound interest?
Simple interest is paid only on the original amount. Compound interest is paid on the original amount plus the interest already earned.
Does more frequent compounding matter?
Yes, but only a little. Monthly or daily compounding gives slightly more than yearly compounding at the same rate.
Is this financial advice?
No. It is an estimate for education. Real returns vary and may include taxes and fees.