Compound Interest Calculator
See exactly how much a lump sum (or a lump sum plus regular contributions) grows over time — and how much of that growth is your own money versus interest working for you. Or, if you’re on the other side of it, see how fast a balance can grow against you.
What compound interest actually does
Simple interest pays you only on your original balance, year after year. Compound interest pays you on your original balance plus every bit of interest you’ve already earned — so each year’s interest is calculated on a slightly bigger number than the last. That small difference is what turns a modest, steady contribution into a much larger number decades later, without you doing anything extra.
A = the future value · P = principal (starting amount) · r = annual interest rate (as a decimal)n = number of times interest compounds per year · t = time in years
Why compounding frequency matters less than you’d think
It’s tempting to assume daily compounding is dramatically better than annual compounding — in reality, the difference is usually small at typical interest rates. What matters far more is time and consistency. An extra 5 years of growth will almost always outweigh a switch from monthly to daily compounding.
- Start earlier, not bigger. Money invested 5 years earlier at a smaller amount often outgrows money invested later at a larger amount — time is doing most of the work.
- Automate contributions. Regular monthly additions compound just like your principal does, and remove the temptation to skip a month.
- Compounding cuts both ways. The same math that grows your savings also grows unpaid debt — credit card balances compound too, usually daily, which is why they escalate so fast.
Frequently asked questions
The nominal rate is the stated annual rate before compounding is applied. The effective annual rate (APY) is what you actually earn once compounding is factored in — it’s always equal to or slightly higher than the nominal rate, and it’s the number worth comparing across different accounts.
No — this shows nominal growth only. Inflation erodes purchasing power over time, and investment gains are often taxable, so your real, spendable result will typically be lower than the raw number shown here.
Yes — unpaid debt (especially credit cards) compounds the same way, often daily. That’s why a balance that seems manageable can grow surprisingly fast if only minimum payments are made. Use the “I’m calculating a debt” option above to see this from that side.
Technically yes, but the real-world difference between, say, monthly and daily compounding is usually small at typical interest rates. Time invested and contribution consistency matter far more than squeezing out extra compounding periods.
Want to compare investments of different lengths fairly?
Try the CAGR Calculator next.
CAGR Calculator Back to Toolkit