Compound Interest Calculator
FinanceEnter your starting balance, how much you add each month, the annual interest rate or expected return and the number of years. Choose monthly or yearly compounding to see your final balance, how much you put in and how much came from interest.
Step by step
$22,000.00 + $9,998.32 = $31,998.32
- Contributions: $10,000.00 to start and $100.00 for 10 years, $22,000.00 in total.
- Annual rate 5%, compounding Monthly. Interest added to the balance earns interest in turn: that is compound interest.
- Final balance: $31,998.32, of which $9,998.32 is interest. The table shows every year.
Once every entry is valid, you’ll see each step of the calculation here.
Formula
- B
- balance after the period (month m or year y)
- P
- starting balance
- D
- monthly contribution, added at the end of the month
- r
- annual interest rate as a decimal, 0.05 for 5%
- k, t
- compounding periods per year (12 or 1) and years
How it works
Compound interest means you earn interest not only on the money you put in but also on the interest already added to your balance. Each period the balance grows by the period rate, and the next period’s interest is figured on that larger balance. $10,000 at 5% a year, compounded yearly, grows to $10,500 after one year, $11,025 after two and $16,288.95 after ten.
With monthly compounding, the annual rate is divided by 12 and applied every month, and each monthly contribution is added at the end of the month. That is how most savings accounts and investment illustrations work. $10,000 plus $100 a month at 5% for 10 years ends at $31,998.32: $22,000 contributed and $9,998.32 in interest. With yearly compounding, interest is credited once a year; the contributions made during the year earn simple interest until year end and start compounding in the next year, which gives $31,728.31 for the same inputs.
Time matters more than anything else. $500 a month at 7% for 30 years, compounded monthly, grows to about $609,985, of which only $180,000 are your own contributions. The rate here is a fixed assumption: real investment returns go up and down, and taxes and fees reduce them, so treat the result as an estimate, not a promise. To see what a loan costs instead, use the loan calculator.
The formula
In the yearly formula, 12 + 5.5 × r is the year-end value of twelve monthly contributions of 1 dollar with simple interest: the contribution at the end of month 1 earns 11 months of interest, the last one none, which averages to 5.5 months (66 / 12) at the annual rate.
Monthly compounding gives a slightly higher effective yield than the stated rate: 5% compounded monthly is (1 + 0.05 / 12)^12 - 1 = 5.12% a year, which banks report as the APY. If your account states an APY, choose yearly compounding with that APY to match it.
Example
You have $10,000.00 and add $100.00 a month at 5%. What do you have after 10 years?
- Contributions: $10,000 plus 120 × $100 = $22,000.00.
- Each month the balance grows by 5% / 12 and the $100 is added. After 120 months it reaches $31,998.32.
- Interest earned: $31,998.32 - $22,000.00 = $9,998.32.
Your savings grow to $31,998.32. You put in $22,000.00; $9,998.32 comes from interest and interest on interest.
Load this example into the calculatorFrequently asked questions
What is the formula for compound interest?
Without contributions, A = P × (1 + r / n)^(n × t): P is the starting amount, r the annual rate as a decimal, n the compounding periods per year and t the years. $5,000 at 4% compounded monthly for 5 years: 5,000 × (1 + 0.04 / 12)^60 = $6,104.98.
How much will $10,000 grow in 10 years?
At 5% compounded yearly it becomes $16,288.95; compounded monthly, $16,470.09. At 7% yearly it is $19,671.51 and at 10% yearly $25,937.42. Regular contributions add much more on top.
What is the rule of 72?
Divide 72 by the annual interest rate to estimate how many years it takes to double your money. At 6% that is about 12 years; at 8%, about 9 years. The exact doubling time at 6% compounded yearly is 11.9 years.
Is monthly or yearly compounding better?
At the same stated rate, monthly compounding earns a little more, because interest starts earning interest sooner. At 5% the difference is 5.12% versus 5% a year. When banks quote an APY, the compounding is already built in, so compare APYs.
What about daily compounding?
The calculator offers monthly and yearly compounding. Daily compounding, which many savings accounts use, earns only slightly more than monthly: at 5% it yields 5.13% a year against 5.12% with monthly compounding, and $10,000 grows to $16,486.65 in 10 years instead of $16,470.09. Choose monthly for a close estimate, or enter your account’s APY with yearly compounding to match the bank exactly.
Does this include taxes and inflation?
No. Interest in a regular savings or brokerage account is usually taxable each year, while 401(k) and IRA accounts defer or avoid tax. Inflation also lowers what the final balance can buy. Use a lower rate if you want a rough after-tax or after-inflation picture.
- Compound Interest Calculator (Investor.gov, U.S. Securities and Exchange Commission)
- Compound interest (glossary) (Investor.gov, U.S. Securities and Exchange Commission)
- 12 CFR Part 1030, Appendix A: Annual Percentage Yield Calculation (Legal Information Institute, Cornell Law School)