Compound Interest Calculator
Calculate compound interest and see how your investments grow over time with our free compound interest calculator. Visualize the power of compounding with interactive charts, detailed breakdowns, and export options for financial planning.
Compound Interest Calculator Calculator
Enter Your Values
The initial amount of money you are investing or saving
The yearly interest rate as a percentage
The number of years to calculate compound interest
How often interest is calculated and added to your account
How to Use the Compound Interest Calculator
1
Enter your initial principal amount - this is your starting investment or deposit
2
Input the annual interest rate as a percentage (e.g., 5 for 5%)
3
Choose how often interest compounds - annually, semi-annually, quarterly, monthly, or daily
4
Select your investment time period in years
5
Click Calculate to see your future value and total interest earned
6
Review the interactive growth chart showing principal vs total value over time
7
Examine the year-by-year breakdown table for detailed insights
8
Export your results as CSV, PDF, or copy to clipboard for record keeping
9
Share your calculation with others using the share link feature
10
Adjust inputs to compare different scenarios and optimize your strategy
Why Use Our Compound Interest Calculator
Visualize the exponential power of compound interest with interactive charts
Compare different compounding frequencies to maximize returns
Plan long-term investment strategies with confidence
Understand how small rate differences create large impacts over time
See detailed year-by-year growth projections with exact figures
Perfect for retirement planning, 401k projections, and IRA calculations
Calculate returns on savings accounts, CDs, and money market accounts
Educational tool for understanding compound growth principles
Export results in multiple formats for financial planning documentation
Share calculations with financial advisors or family members
Mobile-friendly responsive design works on all devices
Instant results with professional-grade accuracy
Privacy-focused with no data collection or account required
Suitable for beginners and experienced investors alike
Updated calculations reflecting current market considerations
Compare compound interest vs simple interest scenarios
Understand the impact of different contribution frequencies
Free to use with unlimited calculations
No ads or distractions - focus on your financial planning
Trusted by thousands of users for accurate calculations
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Calculate now →Frequently Asked Questions About Compound Interest
What is compound interest and how does it work?
Compound interest is interest calculated on both the initial principal and accumulated interest from previous periods. It works by reinvesting earned interest back into the principal, creating exponential growth over time. This "interest on interest" effect is what makes compound interest so powerful for building wealth.
How do you calculate compound interest manually?
Use the formula A = P(1 + r/n)^(nt), where A is future value, P is principal, r is annual rate (as decimal), n is compounds per year, and t is time in years. For example: $1,000 at 5% compounded monthly for 10 years = 1000(1 + 0.05/12)^(12×10) = $1,647.01.
What's the difference between compound and simple interest?
Simple interest is calculated only on the principal amount, while compound interest is calculated on principal plus accumulated interest. Over time, compound interest generates significantly higher returns. For example, $10,000 at 6% for 20 years yields $12,000 simple interest but $22,040 compound interest.
How much will $10,000 be worth in 20 years at 7% compound interest?
With annual compounding, $10,000 at 7% for 20 years grows to $38,697. With monthly compounding, it reaches $40,310. With daily compounding, it's $40,552. Use our calculator to see detailed year-by-year growth and compare different compounding frequencies.
Which is better: daily or monthly compound interest?
Daily compounding is better for the investor as it calculates and adds interest more frequently. However, the difference is usually small. For example, $10,000 at 5% for 10 years yields $16,470 with monthly compounding vs $16,487 with daily - only $17 more.
How does compound interest apply to credit card debt?
Credit cards typically compound interest daily on unpaid balances, working against you. A $5,000 balance at 18% APR costs $4,931 in interest over 5 years if only making minimum payments. This shows why paying off high-interest debt quickly is crucial.
What is the Rule of 72 in compound interest?
The Rule of 72 estimates how long it takes money to double: divide 72 by the interest rate. At 6% interest, money doubles in 12 years (72÷6=12). At 9%, it doubles in 8 years. This quick calculation helps with financial planning.
How often should interest compound for maximum returns?
More frequent compounding yields higher returns. Daily compounding is best, followed by monthly, quarterly, semi-annual, and annual. However, the difference decreases with higher frequency - daily vs monthly is minimal compared to monthly vs annual.
Can you lose money with compound interest?
Compound interest itself doesn't cause losses, but it works both ways. With debt, compound interest increases what you owe. With investments, market volatility can cause temporary losses, but compound interest on positive returns builds wealth over time.
What's the best compound interest investment?
The "best" depends on your risk tolerance and timeline. Low-risk options include high-yield savings accounts and CDs. Moderate risk includes bonds and dividend stocks. Higher risk/return options include growth stocks and index funds. Diversification is key.
How much money do I need to benefit from compound interest?
Any amount benefits from compound interest. Starting with $100 monthly at 7% grows to $52,397 in 20 years. The key is starting early and being consistent. Time, not initial amount, is the most important factor.
Is compound interest taxable?
Yes, interest earned is typically taxable income. However, tax-advantaged accounts like IRAs, 401ks, and 529 plans allow tax-deferred or tax-free compounding. This tax efficiency significantly increases long-term returns.
How do banks calculate compound interest on savings?
Banks typically compound interest daily based on your daily balance, but credit it monthly. The APY (Annual Percentage Yield) reflects the effect of compounding. Always compare APY, not just interest rate, when choosing accounts.
What's the compound interest formula for monthly contributions?
For regular contributions: FV = P(1+r/n)^(nt) + PMT×[((1+r/n)^(nt)-1)/(r/n)], where PMT is the monthly payment. Our calculator handles this complex math automatically when you add regular contributions.
Can compound interest make you rich?
Yes, compound interest is a primary wealth-building tool. Starting at 25, saving $500 monthly at 8% returns creates $1.7 million by 65. Starting at 35 only yields $680,000. Early, consistent investing harnesses compound interest most effectively.
How accurate is this compound interest calculator?
Our calculator uses precise mathematical formulas and is accurate to the cent. It accounts for different compounding frequencies and provides exact calculations used by financial institutions. Results match professional financial planning software.
What's continuous compound interest?
Continuous compounding is the theoretical limit where interest compounds infinitely often, using the formula A = Pe^(rt). It yields slightly more than daily compounding but is mainly used in theoretical finance rather than real accounts.
How does inflation affect compound interest?
Inflation reduces the purchasing power of future money. If earning 5% interest with 2% inflation, your real return is only 3%. Always consider inflation-adjusted returns for long-term planning. Our calculator shows nominal returns.
Should I pay off debt or invest for compound interest?
Generally, pay off high-interest debt first. If debt costs 18% APR but investments earn 8%, you're losing 10% annually. Once high-interest debt is cleared, invest for compound growth. Low-interest debt (like mortgages) may be kept while investing.
What's the difference between APR and APY?
APR (Annual Percentage Rate) doesn't include compounding effects. APY (Annual Percentage Yield) does. For example, 12% APR compounded monthly equals 12.68% APY. Always use APY for accurate comparisons between accounts.
How do I calculate compound interest in Excel?
Use the FV (Future Value) function: =FV(rate/periods, total_periods, 0, -principal). For example, =FV(0.05/12, 12*10, 0, -1000) calculates $1,000 at 5% monthly compounding for 10 years. Our calculator provides the same results instantly.
What happens to compound interest if I withdraw money early?
Early withdrawals reduce your principal, breaking the compounding cycle and significantly impacting long-term growth. A $10,000 withdrawal after 10 years can cost over $50,000 in lost growth over 30 years at 7% interest.
How does compound interest work in the stock market?
Stocks compound through price appreciation and reinvested dividends. The S&P 500 has averaged ~10% annual returns over decades. Reinvesting dividends adds 2-3% more annually through compound growth. Long-term investing maximizes this effect.
What's the best age to start using compound interest?
The best time is as early as possible. Starting at 20 vs 30 can double your retirement savings. Even small amounts compound significantly over decades. Parents can open custodial accounts to give children a compound interest head start.
Do CDs use compound interest?
Yes, most CDs compound interest, typically daily or monthly. The APY reflects this compounding. Longer-term CDs often offer higher rates, maximizing compound growth. Our calculator helps compare different CD options and terms.
How does compound interest affect mortgage payments?
Mortgages use compound interest in reverse - you pay interest on the outstanding balance. Extra principal payments early in the loan save significant interest over time because they reduce the balance on which future interest compounds.
Can I calculate compound interest for cryptocurrencies?
Yes, many crypto platforms offer interest-bearing accounts or staking rewards that compound. Rates vary widely (2-20%+) with corresponding risks. Use our calculator with the offered rate to project potential returns, but remember crypto volatility.
What's the compound interest on a million dollars?
At 5% annual compound interest, $1 million grows to $1.63 million in 10 years, $2.65 million in 20 years, and $4.32 million in 30 years. Higher rates create dramatic differences - at 8%, it reaches $10.06 million in 30 years.
How do I teach kids about compound interest?
Use simple examples like doubling pennies daily for a month (reaches $10+ million). Open a savings account and track growth together. Use our calculator to show how their money can grow. Start with small, regular contributions to build habits.
Is compound interest guaranteed?
Compound interest calculations are guaranteed for fixed-rate accounts like savings, CDs, and bonds. Investment returns (stocks, mutual funds) aren't guaranteed but historically provide higher long-term compound growth despite short-term volatility.