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Free calculator

Compound Interest Calculator

Enter what you have now, what you can add each month and an interest rate to see how your savings could grow, how much of the balance is interest, and what compounding adds compared with simple interest.

%

Compounded every

How often interest is added to your balance (compounded). Once it’s added, it earns interest too. Your account’s terms say how often this happens.

years

Balance after 20 years

$43,816

By September 2046

You put in
$25,000
Interest earned
$18,816
Interest on interest
$5,866
what compounding adds
APY
5.116%
yearly rate with compounding

Saving $1,000 now and $100 a month at 5% a year, compounded monthly, grows to about $43,816 in 20 years. You put in $25,000, and the other $18,816 is interest. $5,866 of that interest was earned on earlier interest. Simple interest, which only pays on the money you put in, wouldn’t give you that part.

Compound interest vs simple interest

MeasureCompoundSimple
Balance at the end$43,816$5,866 more$37,950
Interest earned$18,816$12,950
You put in$25,000$25,000
Your savings over time

What you’ve put in, and what your balance is worth with interest added.

  • Balance
  • You put in
$0$10K$20K$30K$40K$50KNowYr 5Yr 10Yr 15Yr 20$43,816$25,000
Interest earned each year

Each year’s interest is bigger than the last, because it’s paid on a bigger balance.

$2,101$0$500$1K$1.5K$2KYr 1Yr 3Yr 5Yr 7Yr 9Yr 11Yr 13Yr 15Yr 17Yr 20

What your final balance is made of

Money you put in
$25,000(57%)
Interest
$18,816(43%)

Year by year

20 years

What this calculator assumes

  • The interest rate stays the same for the whole time. Savings rates can change, and investments don’t pay a fixed rate at all.
  • Each time interest is compounded, it’s added at the yearly rate divided by the number of times a year it’s compounded (365 for daily).
  • Your monthly deposits are spread evenly over each compounding period and start earning interest at the next compounding date. With monthly compounding, each deposit is added at the end of the month. With yearly compounding, money you add during a year starts earning interest the next year. This is the same method as the SEC’s calculator on Investor.gov.
  • You never withdraw money, and there are no fees.
  • Figures are before tax and aren’t adjusted for inflation.

These are estimates to help you understand the numbers, not financial advice. Check the exact figures with your lender or a qualified adviser before making a decision.

What compound interest is

Compound interest is interest paid on your original money and on the interest it has already earned. Each time interest is added to your balance, it starts earning interest of its own.

Investor.gov, the SEC’s investor education site, uses a simple example. Put $100 in an account that pays 5% a year and you have $105 after one year. In the second year you earn 5% on $105, not $100, so you end with $110.25. The extra 25 cents is interest on your interest. That’s tiny at first, but it keeps building: leave the $100 alone for 25 years and it’s almost $340.

Simple interest works differently. It pays only on the money you put in, so the interest never grows. The calculator shows both side by side so you can see how much of your balance comes from compounding.

How the calculator works

You choose how often interest is compounded, meaning added to your balance: daily, monthly, quarterly or yearly. Each time, the calculator adds interest at the yearly rate divided by the number of times it’s compounded in a year. At 5% compounded monthly, that’s 5% ÷ 12, about 0.417%, every month. Your monthly deposits are then added and earn interest from the next compounding date on.

With monthly compounding and monthly deposits, this is the standard future value formula:

Balance = P × (1 + i)n + D × ((1 + i)n − 1) ÷ i

Here P is your starting amount, D your monthly deposit, i the monthly rate (the yearly rate ÷ 12) and n the number of months. This is the same method the SEC’s compound interest calculator on Investor.gov uses; in every case we checked, our results match it to the cent.

The calculator also shows the APY (annual percentage yield). It’s the rate you really earn in a year once compounding is included, so it’s a little higher than the interest rate whenever interest is compounded more than once a year. Banks in the US have to show the APY, so it’s a useful way to compare savings accounts.

Worked example

Say you open an account with $1,000 and add $100 a month for 20 years, earning 5% a year compounded monthly. Over the 20 years you put in $25,000.

  • Your balance grows to $43,816. That’s $18,816 of interest on top of your own money.
  • In the first year you earn $79 of interest. In the last year you earn $2,101, because by then interest is paid on a much bigger balance.
  • With simple interest, where interest is only paid on the money you put in, you’d end with $37,950. Compounding adds $5,866 of interest on interest.

How often interest is compounded matters much less than the rate or the time. With the same deposits and rate, compounding yearly gives $42,332 and compounding daily gives $43,952.

What makes the biggest difference

Time does most of the work. Compounding is slow at first and speeds up later, so the last years add the most; the “Interest earned each year” chart shows it. That’s why Investor.gov’s material for teachers says starting young lets students take advantage of compound interest.

The rate comes next. A higher rate grows your balance faster every year, and the gap keeps widening, so try moving it by one percentage point and watch the balance. Regular deposits help too, because they give compounding more money to work on. How often interest is compounded matters least: daily beats yearly, but by much less than a one-point change in the rate.

The Rule of 72

For a quick estimate without a calculator, divide 72 by the yearly interest rate. The answer is roughly how many years it takes your money to double. At 9%, your money doubles about every 8 years (72 ÷ 9 = 8). At 6%, it takes about 12 years. It’s rough, but good enough to compare rates in your head.

Using your results

  • Check the account’s terms. A US bank has to tell you the interest rate, the APY and how often interest is compounded and credited. Enter the interest rate and the compounding frequency here.
  • Investments aren’t savings accounts. Stocks and funds don’t pay a fixed rate. Their returns go up and down, and you can lose money. If you use this calculator for investments, try a few different rates rather than trusting a single number.
  • Remember tax and inflation. Interest on bank accounts and CDs is usually taxable in the year you can withdraw it. Prices also rise over time, so a future balance will buy less than the same amount today.
  • Compounding works against you on debt. When you owe money, unpaid interest is added to the balance and charged interest too. Our credit card debt calculator shows what that costs.

Frequently asked questions

What is compound interest?

It’s interest paid on your original money and on the interest you’ve already earned. $100 at 5% a year becomes $105 after one year. The next year you earn 5% on $105, so you end with $110.25. That extra 25 cents is interest on interest, and it gets bigger every year you leave the money alone.

What is the difference between simple and compound interest?

Simple interest is paid only on the money you put in, so you earn the same amount every year. Compound interest is also paid on the interest you’ve already earned, so the amount grows each year. Over a few years the difference is small. Over decades, it can be a large part of your balance, as the comparison table in the calculator shows.

Does it matter how often interest is compounded?

A little. The more often interest is compounded, the sooner it starts earning interest of its own, so daily compounding pays slightly more than monthly, and monthly more than yearly. The difference is much smaller than the effect of a higher rate or more time. Switch between the options in the calculator to see it for your numbers.

What is the difference between the interest rate and the APY?

The interest rate is the yearly rate before compounding. The APY (annual percentage yield) is what you actually earn in a year once compounding is included, so it’s a little higher when interest compounds more than once a year. US banks have to show both. To compare accounts, compare their APYs. In this calculator, enter the interest rate and choose how often it compounds.

What is the Rule of 72?

It’s a quick way to estimate how long it takes money to double. Divide 72 by the yearly interest rate: at 9%, money doubles about every 8 years, and at 6%, about every 12 years. It’s rough, but good enough for comparing rates in your head.

Do I pay tax on interest?

Usually, yes. The IRS says most interest you receive, or that’s credited to an account you can withdraw from without penalty, is taxable income in the year it becomes available to you. That includes interest on bank accounts, money market accounts and CDs. Money in tax-advantaged accounts, such as retirement accounts, follows different rules.

Can I use this calculator for stocks or funds?

You can use it for a rough idea, but investments don’t pay a fixed rate. Their value goes up and down from year to year, and you can lose money. If you use it for investments, try several rates to see a range of outcomes rather than relying on a single answer.