Compound Interest Calculator

Compound interest is what makes money grow faster over time than simple interest alone — instead of earning interest on just your original amount, you earn interest on your interest too, and that snowballing effect gets stronger the longer money is left to grow. This calculator shows exactly how a single starting amount compounds over time at a given annual rate.

The one input that makes this calculator different from a simple growth estimate is compounding frequency — how often interest is added to the balance. Choosing annually, semi-annually, quarterly, monthly, or daily compounding changes the result even at the exact same interest rate, because more frequent compounding means interest starts earning its own interest sooner. The difference is real but shrinks the more frequently you already compound — the jump from annual to monthly compounding matters far more than the jump from monthly to daily.

This tool models a single lump sum with no additional deposits along the way — it's meant to make the mechanics of compounding clear, not to replace a full savings or investment projection. The result is a mathematical projection based on the rate you enter, not a guaranteed return: real savings and investment rates change over time, so use this as an illustration of how compounding works rather than a promise of what you'll actually earn.

A worked example

Say you deposit a $5,000 lump sum at a 5% annual rate for 10 years. Compounded annually, the formula gives a final balance of $8,144.47 — $3,144.47 in interest on top of the original $5,000. Switch only the compounding frequency to monthly, and the balance rises to $8,235.05 ($3,235.05 in interest); switch it again to daily, and it reaches $8,243.32 ($3,243.32 in interest). Notice how much of the gain from more frequent compounding — $90.58 of it — comes from the jump between annual and monthly, while the jump from monthly to daily adds only another $8.27: the same diminishing-returns pattern the FAQ below describes, shown here with real numbers.

A common misconception

It's easy to assume interest rate is the only variable that matters, but time does more of the work than most people expect, because of how compounding stacks on itself. Doubling the interest rate in the example above (5% to 10%) more than doubles the interest earned over the same 10 years, since each year's larger balance also compounds — growth under compound interest isn't linear with either rate or time, even though it can look that way over short periods.

Where a single lump-sum projection falls short

This tool intentionally models one deposit growing alone with no further money added — it doesn't represent an account you keep contributing to, which is a different (and for most savers, more realistic) scenario covered by Savings Calculator or Investment Calculator instead. It also can't account for a rate that changes over the projection period, taxes owed on interest as it's earned, or account fees — all of which would pull a real balance below this pure-math projection.

How to use this result

Use the final balance and interest-earned figures to build intuition for how starting amount, rate, time horizon, and compounding frequency each move the outcome — change one variable at a time, as in the worked example above, to see which has the biggest effect on your specific numbers. It's most useful as a comparison tool (this rate vs. that one, this many years vs. that many) rather than as a forecast of an exact real-world balance.

Nominal rate vs. effective annual yield

The annual rate you enter here is a nominal rate — the stated percentage before accounting for how often it compounds. The actual amount that rate earns over a year, once compounding is factored in, is called the effective annual yield (in banking specifically, the Annual Percentage Yield, or APY, defined under the Truth in Savings Act and its implementing Regulation DD). Two accounts advertising the same nominal rate can pay out different amounts if one compounds more frequently than the other — exactly the gap the compounding-frequency comparison above illustrates, and why comparing nominal rates alone can be misleading.