Compound Interest Calculator — See the Power of Compounding
Use this free compound interest calculator to see how your money grows over time. Enter your starting amount, monthly contributions and interest rate to get a full year by year breakdown, total interest earned and a comparison between compound and simple interest.
Compound Interest Calculator
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How to Use the Compound Interest Calculator
Enter your initial investment — or 0 if starting fresh. Add your monthly contribution, annual interest rate and time period. Choose how often interest compounds and click Calculate for your full growth projection including a compound vs simple interest comparison.
What Is Compound Interest?
Compound interest is interest calculated on both your initial principal and all previously earned interest. Unlike simple interest which only applies to your original deposit, compound interest grows exponentially over time — your interest earns interest.
Albert Einstein reportedly called compound interest the eighth wonder of the world. Whether or not he said it, the maths backs it up — the longer your money compounds the more powerful the effect becomes.
Compound Interest Formula
A = P(1 + r/n)^(nt)
Where:
A = Final amount
P = Principal (initial investment)
r = Annual interest rate (as a decimal)
n = Number of times interest compounds per year
t = Time in years
For example $10,000 at 7% compounding monthly for 10 years:
A = 10,000 × (1 + 0.07/12)^(12×10) = $20,097
Compound vs Simple Interest
Simple interest is calculated only on your original deposit. Compound interest is calculated on your deposit plus all previously earned interest.
On a $10,000 investment at 7% over 20 years:
Simple interest — $10,000 + ($10,000 × 7% × 20) = $24,000
Compound interest — $10,000 × (1.07)^20 = $38,697
That’s nearly $15,000 more from compounding alone — without adding a single extra dollar.
How Often Does Interest Compound?
The more frequently interest compounds the more you earn. Here’s the difference on $10,000 at 5% for 10 years:
Annually — $16,289
Quarterly — $16,436
Monthly — $16,470
Daily — $16,487
The difference between annual and daily compounding is relatively small — but at higher amounts and longer periods it becomes more significant.
FAQs
What is the Rule of 72?
The Rule of 72 is a quick way to estimate how long it takes to double your money. Divide 72 by your annual interest rate. At 7% interest your money doubles in approximately 72 ÷ 7 = 10.3 years.
What is the difference between compound and simple interest?
Simple interest is calculated only on your principal. Compound interest is calculated on your principal plus all previously accumulated interest. Compound interest grows significantly faster over long periods.
How much will $10,000 grow with compound interest?
At 7% annual interest compounding monthly $10,000 grows to approximately $20,097 after 10 years and $76,123 after 30 years — without adding any extra contributions.
Does compounding frequency matter?
Yes but the difference is smaller than most people expect. Monthly compounding earns slightly more than annual compounding but the gap is modest. The interest rate and time period have far more impact.
Is compound interest good for debt?
Compound interest works against you when you’re in debt — the same exponential growth that builds wealth accelerates debt if left unpaid. This is why high interest credit card debt grows so quickly.
Is this calculator free?
Yes completely free with no sign-up needed.