Compound Interest Calculator
See how an investment grows with compounding, with optional regular contributions.
How to use this calculator
- Enter the starting amount and the annual rate.
- Pick how often interest compounds — savings accounts commonly compound daily, investments are often modeled monthly.
- Optionally add a recurring contribution per compounding period.
The formula
A = P(1 + r/n)^(nt) + PMT × ((1 + r/n)^(nt) − 1) ÷ (r/n)- A
- Final balance
- P
- Initial principal
- r
- Annual rate as a decimal
- n
- Compounding periods per year
- t
- Years
- PMT
- Contribution per period (optional)
How it works
Compounding means each period's interest is calculated on the growing balance, not just the original deposit — interest earns interest.
The second term of the formula is the future value of your regular contributions, each of which compounds for however many periods remain.
More frequent compounding gives slightly higher returns: at 5% annually on $10,000, moving from annual to daily compounding adds roughly $20 over ten years.
Worked example
$10,000 at 5% compounded monthly for 10 years, with no extra contributions.
- 1r/n = 0.05 ÷ 12 ≈ 0.004167
- 2nt = 12 × 10 = 120
- 3A = 10,000 × (1.004167)¹²⁰
A ≈ $16,470.09 — about $6,470 of interest on top of the original $10,000.
When this calculator is useful
- Projecting savings account growth
- Comparing APYs across accounts
- Illustrating why starting early matters
- Estimating long-term investment scenarios
Frequently asked questions
What is the difference between APR and APY?
APY includes the effect of compounding within the year; APR does not. A 5% APR compounded monthly is about a 5.12% APY.
Does compounding daily make a big difference?
Compared to monthly, daily compounding adds only a small amount — the rate matters far more than the frequency.
Is inflation included?
No. Subtract an assumed inflation rate from your return rate to approximate real (purchasing-power) growth.