This free compound interest calculator shows how your money grows when interest earns interest. Set an initial amount, an optional monthly contribution, your interest rate and compounding frequency, and see your future value, total contributions and interest earned.
Year-by-year breakdown
| Year | Deposited | Interest | End balance |
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Estimates only. Actual returns depend on your account’s APY, rate changes and deposit timing. Not financial advice.
How compound interest works
Compound interest is interest calculated on your principal and on previously earned interest. The more frequently it compounds and the longer you stay invested, the faster the snowball grows. This compound interest calculator simulates that growth month by month for an exact result. See how we rate banks and apps or the U.S. Securities and Exchange Commission.
Simple vs compound interest
Simple interest pays only on your original principal, while compound interest pays on the growing balance. Over long periods the difference is dramatic – which is why compounding is often called the eighth wonder of finance.
How to use this compound interest calculator
Enter a starting amount, an optional monthly contribution, your interest rate and how often it compounds, then set the number of years. The tool converts your rate into an exact monthly figure and grows your balance month by month, so the result reflects true compounding rather than a rough estimate. The longer the timeline and the higher the rate, the more dramatic the curve becomes.
A compound interest example
Invest $10,000 once at a 7% return and leave it untouched for twenty years. With annual compounding it grows to roughly $40,387 – meaning more than $30,000 is interest earning interest, far more than your original deposit. That gap is the snowball effect at work, and it is why starting early matters so much. You can cross-check the concept with the official compound interest calculator from the U.S. Securities and Exchange Commission.
Simple interest vs compound interest
Simple interest pays only on your original principal, so $10,000 at 7% would earn a flat $700 every year. Compound interest pays on the growing balance instead, so each year you earn a little more than the last. Over a few years the difference is modest, but across decades it becomes enormous – the main reason long-term savers and investors lean on compounding. The takeaway is straightforward: the earlier you start and the longer you stay invested, the harder compound interest works for you, even at a moderate rate.
Frequently asked questions
How do you calculate compound interest?
Use FV = P(1 + i)^N, where i is the rate per period and N the number of periods. With regular contributions, add PMT × [((1 + i)^N – 1) / i]. This calculator does it for you.
What is the compound interest formula with monthly contributions?
FV = P(1 + i)^N + PMT × [((1 + i)^N – 1) / i], where i is the monthly rate and N the number of months.
Daily vs monthly compounding – which is better?
Daily compounding earns a little more than monthly at the same nominal rate, but APY already captures the difference, so compare accounts by APY.
Does compound interest work against me on debt?
Yes. On loans and credit cards, compounding increases what you owe, which is why paying down high-interest debt early matters.
Is this compound interest calculator accurate?
The engine is verified against known closed-form values and matches them to the cent. Results are reliable estimates.
