Compound Interest Calculator

Guide: Compound Interest Calculator

What compound interest is

Compound interest means you earn interest on your earlier interest. The balance grows slowly at first and then faster, which is why starting early and adding steadily matters more than a high rate over a short time.

The formulas

• Lump sum: A = P × (1 + r/n)^(n×t)
• Contributions of PMT per period: FV = PMT × ((1 + i)^k − 1) ÷ i, where i is the interest rate per contribution period and k the number of contributions. Deposits at the start of each period multiply this by (1 + i).
• Period rate when compounding and contribution frequencies differ: i = (1 + r/n)^(n/m) − 1, with m contributions per year.
• Effective annual rate: (1 + r/n)^n − 1

Example

10,000 at 5% compounded monthly for 10 years: 10,000 × (1 + 0.05/12)^120 = 16,470.09. Adding 100 a month at the end of each month adds about 15,528 more, for a balance near 31,998 from only 22,000 paid in.

Reading the results

The chart shows the balance (solid) against the total you put in (dashed); the gap is interest. The table lists each year’s deposits, interest and balance. Use a realistic rate, not a promised one, and test a lower-return case. Everything is calculated in your browser and rounded only for display.

FAQ

What is the compound interest formula?

A = P(1 + r/n)^(nt) for a lump sum, where P is the principal, r the annual rate, n the compounding periods per year and t the years. Regular contributions add an annuity term.

Does compounding more often matter?

Yes, but with diminishing returns. 5% compounded monthly yields about 5.12% a year; daily gives about 5.13%.

What is the effective annual rate (EAR)?

The true yearly growth after compounding: (1 + r/n)^n − 1. It lets you compare accounts that compound differently.

Contributions at the start or end of the period?

Start-of-period deposits earn one extra period of interest, so the final balance is slightly higher.

Does it include tax, fees or inflation?

No. Enter a lower rate to approximate fees, or subtract expected inflation from the rate to see growth in today’s money. Returns are never guaranteed.