How to use this compound interest calculator
- Starting amount. What you have saved today. Enter 0 if you are starting from scratch.
- Regular deposit. What you plan to add each month or each year. Pick the schedule with the Month and Year buttons.
- Annual interest rate. For a savings account or CD, use the rate the bank quotes. For investments, use a return you think is realistic after fees.
- Years. How long the money stays put.
- Open Compounding, deposit timing and inflation if your account compounds daily or quarterly, if you deposit at the start of each month, or if you want the result in today’s dollars.
The compound interest calculator updates as you type. The chart shows how much of the balance is your own money and how much is interest. Use Copy link to this result to save or share your exact numbers, and Download CSV to take the year-by-year table into Excel or Google Sheets.
The compound interest formula
For a single deposit that sits untouched, the future value is:
A = P × (1 + r/n)^(n × t)
- A
- the amount you end up with
- P
- the starting amount (principal)
- r
- the yearly interest rate as a decimal, so 7% is 0.07
- n
- how many times interest is added each year: 1 for yearly, 12 for monthly, 365 for daily
- t
- the number of years
Regular deposits need a second piece, the future value of a series of equal payments:
FV = PMT × [(1 + i)^N − 1] ÷ i
- PMT
- the deposit you make each period
- i
- the interest rate for one deposit period
- N
- the total number of deposits
Add the two results together and you have the balance. If you deposit at the start of each period instead of the end, multiply the second part by (1 + i), because every deposit earns one extra period of interest.
One detail trips up a lot of calculators: what happens when you deposit monthly but the account compounds daily, or deposit yearly into an account that compounds monthly? This one converts the yearly rate into the exact rate for your deposit period, (1 + r/n)n/p − 1, where p is the number of deposits a year. That keeps the deposits and the starting amount growing on the same schedule, so the numbers match what a bank statement would show.
Worked example: $10,000 plus $200 a month
The plan
You start with $10,000, add $200 at the end of every month, and earn 7% a year compounded monthly. The monthly rate is 0.07 ÷ 12 = 0.5833%.
The first month
$10,000 × 0.005833 = $58.33 of interest, then your $200 goes in. The balance is $10,258.33. Next month, interest is figured on that larger amount, and so on.
Twenty years later
| After | You put in | Interest earned | Balance |
|---|---|---|---|
| 1 year | $12,400 | $801.42 | $13,201.42 |
| 5 years | $22,000 | $6,494.83 | $28,494.83 |
| 10 years | $34,000 | $20,713.58 | $54,713.58 |
| 20 years | $58,000 | $86,572.72 | $144,572.72 |
Look at the interest column. In the first year it is about 6% of the balance. By year 20 it is 60%. Nothing about the plan changed. The interest simply started earning interest of its own, and the effect speeds up the longer you leave it.
Daily vs monthly vs yearly compounding
More frequent compounding does help, but much less than most people expect. Here is $10,000 left alone at 5% for 10 years:
| Compounding | Balance after 10 years | APY |
|---|---|---|
| Yearly | $16,288.95 | 5.000% |
| Twice a year | $16,386.16 | 5.062% |
| Quarterly | $16,436.19 | 5.095% |
| Monthly | $16,470.09 | 5.116% |
| Daily | $16,486.65 | 5.127% |
Going from yearly to daily compounding adds about $198 over ten years. Going from monthly to daily adds less than $17. When you compare savings accounts, look at the APY, which already folds the compounding schedule into one number. An account paying 4.75% APY beats one paying 4.6% compounded daily, which works out to only 4.71% APY. Our APY calculator converts between the two.
Why starting early beats saving more
This is the example that makes compound interest click for most people. Two savers each earn 7% a year, compounded monthly.
- Saver A puts $200 a month away from age 25 to 35, then stops for good. Total deposited: $24,000.
- Saver B waits until 35, then saves $200 a month every month until 65. Total deposited: $72,000.
At 65, Saver A has about $280,968. Saver B has about $243,994, despite putting in three times as much money. Saver A’s ten early years of deposits get thirty extra years to grow, and that head start is worth more than twenty extra years of deposits.
You can test this yourself above. Run your current plan, then set Years five lower. The What this means box shows what waiting five years would cost you in dollars.
What interest rate should you use?
The rate you enter matters more than any other input, so pick it on purpose:
- Savings accounts, money market accounts and CDs: use the APY on the bank’s rate sheet and set compounding to match (most savings accounts compound daily and pay monthly). Rates change, so re-run the numbers when your bank moves its rate. For fixed terms, the CD calculator handles maturity dates.
- Stock and bond funds: there is no fixed rate. Returns swing from year to year and can be negative. Many planners use 5% to 7% a year for long-term projections of a stock-heavy portfolio, and lower figures for a bond-heavy one. Treat the result as a range, not a promise.
- Debt: the same math works against you. A credit card charging 24% compounded daily grows a balance faster than almost any investment grows savings.
Inflation and taxes: the two quiet drags
Inflation shrinks what a future dollar buys. The default plan above ends with $144,573, but at 2.5% inflation that money buys what about $88,229 buys today. The calculator shows this figure whenever the inflation box is above zero, so you can plan in today’s prices.
Taxes take a slice of interest every year in a regular savings or brokerage account. Banks report interest on Form 1099-INT, and it is taxed as ordinary income in the year you earn it. Inside a 401(k), traditional IRA, Roth IRA or HSA, the interest compounds without that yearly cut, which is a big reason those accounts grow faster over decades. The 401(k) calculator and Roth IRA calculator build in the contribution limits for each.
Simple interest vs compound interest
Simple interest is paid only on the original amount. Compound interest is paid on the original amount plus all the interest already added. Over short periods the gap is small. Over long ones it is huge.
| Type | Interest earned | Ending balance |
|---|---|---|
| Simple interest | $18,000.00 | $28,000.00 |
| Compound interest, yearly | $47,434.91 | $57,434.91 |
Same money, same rate, same 30 years. Compounding more than doubles the interest.
Five ways to make compounding work harder
- Start now, even small. The early years do the heavy lifting, as Saver A showed.
- Automate the deposit. A transfer that happens on payday never gets skipped.
- Leave the interest in. Withdrawing interest turns compound interest back into simple interest.
- Chase the APY, not the compounding schedule. A higher rate beats more frequent compounding.
- Use tax-advantaged accounts first. Especially when an employer match is on the table, which is an instant return no savings account can match.
Ready to check your own plan? Go back to the compound interest calculator, put in your real starting balance and monthly savings, and copy the link so you can compare it when your numbers change.