Compound Interest Calculator

What is compound interest?

Compound interest is interest calculated on both the initial principal and on interest already earned. So your money grows faster than with simple interest, where interest is only on the principal. Over time, the gap between simple and compound interest becomes large: a $10,000 deposit at 6% for 20 years yields $12,000 in simple interest ($22,000 total) but about $22,100 in compound interest (monthly) — roughly $32,100 total. Compounding frequency (monthly, quarterly, yearly) also affects the result: more frequent compounding gives a slightly higher final amount.

Compound interest formula

Example: P = $10,000, r = 6% = 0.06, t = 10 years, monthly compounding (n = 12). A = 10000 × (1 + 0.06/12)^(12×10) ≈ $18,194. Total interest ≈ $8,194. The same principal at simple interest would give only $6,000 interest ($16,000 total).

Understanding your result: what each number means

Final amount (A): The value of your investment at the end of the period. It is the principal plus all compounded interest.

Interest earned: The difference between the final amount and your initial principal. This is your return from compounding. Each period, interest is calculated on the current balance (principal + prior interest), so you earn "interest on interest."

Growth factor: (1 + r/n)^(n×t) is how much your principal multiplies by. For example, 1.5 means your money grows to 1.5 times the principal. The calculator shows the exact values (P, r, n, t) and the resulting factor so you can verify the math.

This calculator uses monthly compounding (n = 12) by default, which matches most savings accounts and many investment products. Always confirm the compounding frequency in your actual product terms.

Different compounding frequencies

For the same rate and time, more frequent compounding yields a slightly higher amount. The difference between monthly and yearly compounding is small but meaningful over long periods.

• Annual (n = 1): interest added once per year.
• Semiannual (n = 2): twice per year.
• Quarterly (n = 4): four times per year.
• Monthly (n = 12): most common for savings and many loans.
• Daily (n = 365): some savings accounts use this.

Rule of 72

The Rule of 72 gives a quick estimate of how long it takes for money to double at a given annual return. It works best for rates between about 4% and 15%. For more precision, use this compound interest calculator.

Why compounding matters for savings and investments

• Longer time horizons allow compounding to have a much bigger impact.
• Higher (but realistic) rates accelerate growth; small rate differences add up over decades.
• Reinvesting interest or dividends keeps compounding working for you.
• Starting early gives more years of compounding — even small regular deposits can grow significantly.

Where compound interest appears

Savings accounts, fixed deposits (CDs), bonds, and most investments use compound or compound-like growth. Loans (mortgages, car loans, credit cards) also use compounding: interest is typically calculated monthly on the outstanding balance. This calculator helps you see growth on a lump sum; for regular contributions, use our SIP or savings calculator.