See how savings grow with compound interest, with optional monthly contributions and a year-by-year breakdown of what you paid in and what you earned.
For illustration only. Not financial advice. Actual returns depend on your provider’s terms, fees and taxes.
How to use the compound interest calculator
- Enter your starting amount, the annual interest rate and the number of years.
- Pick how often interest compounds. Most savings accounts compound monthly or daily; check your account terms.
- Add a monthly contribution if you plan to keep saving. It is added at the end of each month.
- Read the final balance, then the table and chart to see how paid-in money and interest build up each year.
How compound interest works
With compound interest, the interest you earn is added to your balance, and the next period’s interest is worked out on that larger balance. You earn interest on your interest.
Take 10,000 at 5% a year, compounded yearly. In year 1 it earns 500 and becomes 10,500. In year 2 it earns 5% of 10,500, which is 525, and becomes 11,025. The amount earned grows every year even though the rate stays the same.
How often interest compounds
The more often interest is added, the sooner it starts earning interest of its own. The table shows 10,000 at 5% for 10 years with no contributions.
| Compounding | Balance after 10 years | Effective annual rate |
|---|---|---|
| Yearly | 16,288.95 | 5% |
| Monthly | 16,470.09 | 5.116% |
| Daily | 16,486.65 | 5.127% |
The gap between monthly and daily compounding is small. The rate, the time and how much you add each month make far more difference.
Formula
Lump sum: A = P × (1 + r ÷ n)^(n × t)
Monthly rate used for contributions: i = (1 + r ÷ n)^(n ÷ 12) − 1
Each month: balance = balance × (1 + i) + contribution
P is the starting amount, r the annual rate as a decimal, n the compounding periods per year and t the years.
Worked examples
10,000 at 5% compounded monthly for 10 years grows to 10,000 × (1 + 0.05 ÷ 12)^120 = 16,470.09.
Adding 100 at the end of every month adds a further 15,528.23, for a total of 31,998.32. You paid in 22,000, so 9,998.32 is interest.
Starting from nothing, 200 a month at 5% compounded monthly for 20 years grows to 82,206.73. You paid in 48,000, and 34,206.73 is interest.
What this calculator leaves out
- Tax on interest or gains.
- Account fees and charges.
- Inflation, which reduces what the final balance will buy.
- Rate changes. The calculator assumes one fixed rate for the whole period, while many savings rates change over time and investment returns go up and down.
Frequently asked questions
What is the difference between the interest rate and the effective annual rate?
The effective annual rate includes compounding within the year. 5% compounded monthly is the same as 5.116% paid once a year.
Does this include tax or fees?
No. Results are before tax, account fees and inflation, so treat them as an estimate.
When are contributions added?
At the end of each month, after that month’s interest. Paying in at the start of the month would earn slightly more.
What is the rule of 72?
A quick way to estimate how long money takes to double: divide 72 by the annual rate. At 6%, money doubles in about 72 ÷ 6 = 12 years; the exact figure with yearly compounding is 11.9 years.
What makes the biggest difference to the final balance?
Time and regular saving. In the 20-year example above, interest makes up 34,206.73 of the balance, more than 70% of the 48,000 paid in. Starting a few years earlier usually adds more than finding a slightly higher rate.
Is this financial advice?
No. It shows the arithmetic of compounding. Real returns on investments vary and can be negative.
Related tools
- MathematicsPercentage CalculatorWork out a percentage of a number, what percent one number is of another, or the percentage change between two values.
- BusinessProfit Margin & Markup CalculatorFind margin and markup from cost and price, or work out the selling price you need for a target margin or markup.