Use this free compound interest calculator to see how your savings grow over time. Enter a starting amount, an interest rate and a number of years, and choose how often interest is added: daily, monthly, quarterly or yearly. You can add money each month or withdraw it, raise your deposits every year and see your balance in today's money. You get the final balance, the interest earned, the effective annual rate, a growth chart and a year-by-year table. It is free and instant, and your numbers stay in your browser.
Amounts in this guide are in US dollars. Unless it says otherwise, the examples start with $10,000, earn 5% a year for 10 years and use interest added once a year.
What is compound interest?
With compound interest, you earn interest on your interest. Each time interest is added, it becomes part of the balance, and the next interest payment is worked out on the larger amount. Over a long time this makes savings grow faster and faster. It works the other way for debt, where unpaid interest makes what you owe grow.
The compound interest formula
A = P × (1 + r ÷ n) ^ (n × t)A is your final balance, P the amount you start with, r the yearly rate as a decimal (5% is 0.05), n how many times a year interest is added and t the number of years. For $10,000 at 5% for 10 years, added yearly, that is 10,000 × 1.05 ^ 10 = $16,288.95.
Simple interest and compound interest
Simple interest is only ever worked out on your original amount. At 5% on $10,000 that is $500 every year, so after 10 years you would have $15,000. With compound interest you have $16,288.95, because each year's interest also earns interest. The gap grows the longer you leave the money.
Daily, monthly and yearly compounding
The more often interest is added, the more you end up with, but the difference is small:
| Interest is added | Balance after 10 years |
|---|---|
| Yearly | $16,288.95 |
| Monthly | $16,470.09 |
| Daily | $16,486.65 |
The rate and the time matter far more than the compounding. The "Compounding frequency compared" table under the calculator shows the same for your own numbers. Banks often quote the effective annual rate, also called APY, which includes compounding. A 5% rate added monthly is an APY of 5.12%, and added daily it is 5.13%.
Compound interest with monthly deposits
Regular saving makes a large difference. If you start with $10,000 and also add $100 a month for 10 years at 5%, added monthly, you end up with about $31,998. You put in $22,000 of your own money ($10,000 plus 120 deposits of $100) and interest adds the other $9,998. Leave it for 20 years and it becomes $68,230, and for 30 years $127,903. By default the calculator adds each deposit at the end of the month. Choose the start of the month under More options and the same plan reaches $32,063, because each deposit earns interest a month sooner. You can also raise your deposits each year: with a 3% yearly increase it reaches $34,057.
Compound interest with withdrawals
Switch Add to Withdraw to take money out each month. With $10,000 at 5% and $50 withdrawn each month, you still have $8,706 after 10 years, because the interest is more than you take out. Withdraw $200 a month instead and the money runs out after 4 years and 9 months. The calculator tells you when that happens, and stops the withdrawals once the account is empty.
The rule of 72
A quick way to estimate how long it takes to double your money is to divide 72 by the yearly rate. At 6% it takes about 72 ÷ 6 = 12 years. It is only an estimate, but it works well for common rates: at 5% the rule gives 14.4 years and the exact answer is 14.2 years.
Compound interest in a savings account or CD
Savings accounts and CDs usually add interest daily or monthly and quote an APY. If you know the APY, you can enter it as the interest rate and pick Yearly to get a matching result. If you know the stated rate instead, pick the way your bank adds interest. The calculator does not include tax or fees, and the rate on a savings account can change.
How inflation changes your growth
Prices usually rise over time, so the same amount buys less in the future. Enter an inflation rate and the calculator shows your balance in today's money. For example, $31,998 after 10 years at 3% inflation has about the buying power of $23,810 today.
Things to remember
- Savings accounts, bonds and funds do not all pay a steady rate, and investment returns can go down as well as up.
- The calculator shows amounts before tax and before fees, which both lower your real return.
- To plan for retirement, try the retirement calculator or the 401(k) calculator.
