Compound Interest Calculator
Calculate how your savings or investment grows with compounding interest. See your total growth, interest earned, and a year-by-year breakdown chart.
Compound Interest Calculator
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How Compound Interest Works
Compound interest means you earn interest not just on your initial deposit, but also on the interest you've previously earned. Over time, this "interest on interest" effect causes your money to grow at an accelerating rate — a phenomenon Albert Einstein reportedly called "the eighth wonder of the world."
A = P × (1 + r/n)^(n×t) + PMT × [((1 + r/n)^(n×t) - 1) / (r/n)]
Where: A = Final Amount · P = Principal · r = Annual Rate · n = Compounding Frequency · t = Years · PMT = Regular Contribution
Step-by-Step Example
Suppose you invest $10,000 at 7% annual interest, compounded monthly, for 20 years, adding $200/month:
- Monthly rate: 7% / 12 = 0.5833%
- Total periods: 20 × 12 = 240 months
- Final balance ≈ $113,000+
- Total deposited: $10,000 + (240 × $200) = $58,000
- Interest earned: ~$55,000+ (almost doubling your deposits!)
Starting to invest just 10 years earlier can more than double your final balance. Time is your most powerful asset when it comes to compound interest.
Frequently Asked Questions
More frequent compounding yields slightly more money. Daily compounding produces marginally more than monthly, which produces more than annual. The difference is small, but monthly compounding is the most common for savings accounts and investments.
Yes — and this is why high-interest debt like credit cards is dangerous. When you carry a balance, interest compounds against you, growing your debt just as it would grow your savings. Paying off high-interest debt quickly saves significantly on interest charges.
The Rule of 72 is a quick shortcut: divide 72 by your annual interest rate to estimate how many years it takes to double your money. At 7% interest, your money doubles in roughly 72/7 ≈ 10.3 years.
Yes, this calculator uses the standard compound interest formula. However, real-world investment returns vary and are not guaranteed. This tool is for educational and planning purposes — actual results depend on your specific investment vehicle.