Compound Interest Calculator

Compound interest is often described as interest earning interest, and that's exactly what this calculator models. Instead of only earning a return on your original principal every year, each period's interest gets added to the balance, and the next period's interest is calculated on that larger amount. Left alone long enough, this snowball effect can turn a modest lump sum into something much larger than simple, non-compounding growth would produce.

The formula behind the calculator is A = P(1 + r/n)^(nt), where P is your principal, r is the annual interest rate, t is the number of years, and n is how many times per year the interest compounds. That last variable, compounding frequency, is where a lot of people get tripped up: a 5% rate compounded annually grows more slowly than the same 5% compounded monthly or daily, because more frequent compounding means interest starts earning its own interest sooner and more often.

In practice, the difference between compounding frequencies is smaller than most people expect once you're talking about the same stated annual rate — the bigger levers by far are the rate itself and, especially, time. A few extra years left untouched will typically do more for your final balance than switching from monthly to daily compounding ever could, which is the whole reason "start early" is such common financial advice.

This calculator assumes a single lump sum with no further deposits or withdrawals along the way, which makes it useful for questions like "what will this CD or bond be worth in ten years?" If you're also planning to add money regularly, like a paycheck contribution to a savings account, you'll want a calculator built for ongoing contributions instead, since that changes the math meaningfully.