Compound Interest Calculator
See how a deposit grows with compound interest — and how much monthly contributions change the ending balance.
The power of compounding
Compound interest is the engine behind long-term saving and investing — and, on the flip side, behind credit-card debt. The idea is simple: interest is added to your balance, and from then on you earn interest on the interest too. Given enough time, this snowball effect means most of the final value comes from growth rather than from what you put in.
Worked example: invest $1,000 at 5% per year, compounded monthly, for 10 years with no further deposits. The final balance is $1,647.01 — you earned $647.01 without adding a cent. Stretch the same deposit to 30 years and it becomes about $4,467: the extra two decades more than double the outcome, with no extra effort.
The two lessons compounding teaches are to start early (time in the formula is an exponent, so it beats almost everything) and to keep costs and rates in your favour (a fee is negative compounding working against you with the same relentless maths).
Frequently asked questions
What is compound interest?
Interest earned not just on your original deposit but also on interest already added. Each period, the balance grows, so the next period's interest is calculated on a larger amount — growth accelerates over time, which is why starting early matters so much.
What is the compound interest formula?
A = P × (1 + r/n)^(n×t), where P is the starting principal, r the annual rate, n the number of compounding periods per year, and t the years. Regular contributions add a second, similar term for the stream of deposits.
How often should interest compound?
More frequent compounding (monthly or daily versus yearly) produces slightly more growth at the same stated rate, because interest starts earning its own interest sooner. The difference is modest at low rates and grows with the rate and term.
What is the Rule of 72?
A shortcut for doubling time: divide 72 by the annual percentage rate to estimate the years needed for money to double. At 6%, about 12 years; at 8%, about 9 years. It is an approximation, but a remarkably good one.