Compound Interest Calculator
See how a balance grows when interest compounds, with optional regular contributions and a chart of the balance over time.
How it works
Compounding means the interest you earn starts earning interest itself. The balance follows a curve rather than a line, and almost all of the difference appears late — which is why time in the market matters more than the rate for most savers.
Compounding frequency changes the result, but less than people expect. Monthly compounding beats annual at the same nominal rate, and daily beats monthly by a smaller margin again. The gains shrink as the frequency rises, approaching a mathematical ceiling.
Regular contributions usually dominate the outcome in the early years. Money you add cannot compound for as long as money already invested, so an early contribution is worth considerably more than a late one of the same size.
The formula
Compound growth
A = P × (1 + r/n)^(n×t)
With regular contributions
A = P(1 + r/n)^(nt) + PMT × (((1 + r/n)^(nt) − 1) ÷ (r/n))
Effective annual rate
EAR = (1 + r/n)^n − 1
Rule of 72
years to double ≈ 72 ÷ rate percent
Worked examples
| Scenario | Working | Result |
|---|---|---|
| 10,000 at 7% for 10 years, monthly | 10000 × (1 + 0.07/12)^120 | ≈ 20,097 |
| Adding 200 a month to that | Plus the contribution term | ≈ 54,700 |
| 7% doubling time | 72 ÷ 7 | About 10 years |
When you'd use it
- Projecting savings or pension growth
- Comparing accounts with different compounding frequencies
- Seeing what regular contributions add over time
- Understanding the real cost of compounding debt
Common questions
How much does compounding frequency actually matter?
Less than the rate or the time. At 7%, monthly compounding beats annual by roughly 0.23 percentage points of effective yield. Daily adds only a little more. Do not choose an account on frequency alone.
What is the rule of 72?
Divide 72 by the annual percentage rate for a rough number of years to double. At 6% that is about 12 years. It is an approximation, accurate enough for mental arithmetic between roughly 4% and 15%.
Does this account for inflation or tax?
No. The figures are nominal. Real purchasing power grows more slowly — subtract inflation from your rate for a rough real return, and remember that tax on interest or gains reduces it further.
Why does the curve look almost flat at first?
Because compounding is exponential, and exponential curves do most of their work at the end. The balance in the final few years often grows more than in the first decade — which is the whole argument for starting early.