Compound Interest Calculator
Updated · By the CalculatorDash editorial team · How we check our maths
Quick answer
With compound interest you earn interest on your interest. $10,000 plus $300 a month at 7% a year, compounded monthly, grows to about $196,700 in 20 years. You contribute $82,000 of that; the other $114,700 or so is interest.
How this calculator works
Compound interest is growth on growth: each period's interest is added to the balance and earns interest itself. Over long periods it dominates. In the default example, interest ends up larger than everything you put in.
The calculator converts your compounding frequency to an equivalent monthly rate so that monthly contributions are handled correctly whether interest compounds daily, monthly, quarterly or yearly. Contributions are assumed at the end of each month.
The formula
- Monthly rate
- (1 + r ÷ k)^(k ÷ 12) − 1, where k is compounding periods per year
- Future value
- start × (1 + rm)^n + monthly × ((1 + rm)^n − 1) ÷ rm
Worked example
Starting with $10,000 and adding $300 a month at 7% compounded monthly for 20 years gives about $40,387 from the starting amount and $156,278 from contributions, roughly $196,700 in total. You put in $82,000, so about $114,700 is interest.
Tips
- 01Time matters more than rate: starting ten years earlier can double the final balance.
- 02Use an inflation-adjusted rate (nominal return minus inflation) to see results in today's money.
- 03The rule of 72: divide 72 by the interest rate to estimate how many years it takes to double.
Frequently asked questions
What is the compound interest formula?
A = P × (1 + r ÷ n)^(n × t) for a single deposit. With regular contributions, add the future value of the series: C × ((1 + i)^m − 1) ÷ i.
How often is interest compounded?
Savings accounts often compound daily or monthly, many deposits quarterly and some bonds yearly. More frequent compounding gives a slightly higher return.
What is the rule of 72?
A shortcut for doubling time: 72 ÷ annual rate. At 8%, money doubles in about 9 years.
Is this the same as simple interest?
No. Simple interest is paid only on the original amount. Compound interest also earns on previously earned interest.