Compound Interest Calculator
See how your money grows over time with the power of compound interest.
Compound Interest Calculator
Calculate your compound interest instantly.
Final Amount
$0What Compound Interest Is
Compound interest is interest earning interest. Each period's return is added to the balance, and the next period is calculated on that larger figure — so growth builds on itself rather than arriving in equal instalments.
The early years look unremarkable. A 7% return on $10,000 is $700 in year one, which is fine but hardly dramatic. By year twenty-five that same 7% is generating over $3,500 annually, because it's working on a balance five times larger. Nothing about the rate changed; only the base did.
The Formula
A = P × (1 + r/n)nt
A = Final Amount · P = Principal · r = Annual Rate · n = Compounds per Year · t = Years
Subtract the principal to isolate the interest earned:
I = A − P
I = Total Interest · A = Final Amount · P = Principal
The exponent is where the power sits. Increasing the time or the compounding frequency raises nt, and because it sits above the line, small changes there produce outsized effects on the result.
Three Levers, Very Unequal Weight
Time
The strongest by a wide margin. It sits in the exponent, so each additional year contributes more than the one before. Nothing else in the formula behaves this way.
Rate
Powerful over long horizons. Two percentage points sounds minor across one year and becomes decisive across thirty.
Frequency
The weakest lever. Moving from annual to daily compounding helps, but far less than most people assume, and the effect plateaus quickly.
This ordering has a practical implication: starting earlier beats optimising the rate, and chasing daily compounding is rarely worth switching providers for.
Watching It Accelerate
$10,000 at 7%, compounded annually, with nothing added along the way:
| Years | Balance | Interest earned | Growth that decade |
|---|---|---|---|
| 10 | $19,672 | $9,672 | $9,672 |
| 20 | $38,697 | $28,697 | $19,025 |
| 30 | $76,123 | $66,123 | $37,426 |
| 40 | $149,745 | $139,745 | $73,622 |
The fourth decade alone produces more than the first three combined. Same deposit, same rate, no additional contributions — the only difference is how much balance the interest had to work on.
How Compounding Frequency Behaves
More frequent compounding does produce more, but the gains shrink fast. $10,000 at 7% for 10 years:
| Frequency | Periods per year | Balance after 10 years | Gain over annual |
|---|---|---|---|
| Annually | 1 | $19,672 | — |
| Quarterly | 4 | $20,016 | $344 |
| Monthly | 12 | $20,097 | $425 |
| Daily | 365 | $20,136 | $464 |
Jumping from annual to quarterly captures most of the available benefit. Going all the way to daily adds only $120 beyond that. Frequency is worth understanding, but it isn't worth agonising over.
The Rule of 72
A shortcut worth memorising: divide 72 by the annual rate to estimate how many years a balance takes to double.
Years to double ≈ 72 ÷ Annual Rate
At 6% ≈ 12 years · At 8% ≈ 9 years · At 12% ≈ 6 years
It's an approximation, accurate to within a few months for rates between 4% and 12%. Its real value is speed — you can weigh two offers mentally, and the cost of a low rate becomes immediately obvious.
Compounding Works Against You Too
The same mechanism that grows savings grows debt, and credit cards are where it does the most damage. Most compound daily on the outstanding balance, so unpaid interest starts accruing interest within twenty-four hours.
A $5,000 balance at 22% APR, paying only the typical 2% minimum:
| Starting balance | $5,000 |
| First monthly payment | $100 |
| Interest in month one | ≈ $92 |
| Actually cleared from the debt | ≈ $8 |
| Time to clear at minimums | Over 25 years |
Ninety-two cents of every dollar goes to the lender. This is why clearing high-rate debt usually beats investing — eliminating a guaranteed 22% cost is a better return than chasing an uncertain 7% gain.
Making It Work in Your Favour
- Start now rather than starting bigger. Ten years of a small monthly amount usually beats five years of a large one, because time is the exponent.
- Reinvest everything. Dividends and interest withdrawn stop compounding permanently. Automatic reinvestment is the easiest improvement most people can make.
- Contribute regularly. Each new deposit begins compounding immediately, on top of everything already growing.
- Watch the fees. A 1% annual charge compounds against you exactly as returns compound for you, and over thirty years it can consume a quarter of the final balance.
- Clear expensive debt first. Paying off a 22% balance is mathematically identical to earning a guaranteed 22% return, with none of the risk.
- Leave it alone. The largest gains sit in the final years. Withdrawing early removes precisely the period that mattered most.
Frequently Asked Questions
Interest is added to the balance and then earns interest itself, so each period starts from a larger base than the last. Growth curves upward instead of running in a straight line, and the effect becomes dramatic once the term stretches past a decade or two.
Time, by a clear margin. It sits in the exponent, so every extra year contributes more than the one before it. A modest rate over thirty years typically beats an excellent rate over ten. Starting earlier is the most reliable advantage available.
Rarely on its own. On $10,000 at 7% over ten years, daily compounding beats annual by around $464 — real, but small next to what a half-point better rate would deliver. Compare rates first and treat frequency as a tiebreaker.
Divide 72 by the annual rate for a quick estimate of the doubling period. At 9% a balance roughly doubles in eight years. It's accurate to within a few months for rates between 4% and 12%, which makes it useful for comparing options mentally.
Yes, and it's the reason balances escalate. Credit cards typically compound daily, so unpaid interest begins accruing interest almost immediately. Paying only the minimum can leave a modest balance outstanding for decades.
Compare the numbers directly. Eliminating a 22% debt is equivalent to a guaranteed 22% return with no risk attached — better than almost any investment. Clear high-rate debt first, then invest. Low-rate debt is a closer call.
No. The result is a nominal figure. Inflation reduces what that balance can actually buy, and interest or gains are usually taxable. As a rough guide, subtract the inflation rate from your return to see the real growth.
This calculation models a single lump sum. Regular contributions change the maths considerably, since each deposit begins compounding from its own start date — and for most savers they matter more than the initial amount.