Compound Interest Calculator
Calculate compound interest with monthly, quarterly, or annual compounding. Shows final amount, total interest earned, and a year-by-year breakdown.
Final Amount
Total Interest
Total Return
Year-by-Year Breakdown
| Year | Balance | Interest Earned | Total Interest |
|---|
How Compound Interest Works
With compound interest, you earn interest on your interest. Each compounding period, the interest earned is added to the principal, and the next period's interest is calculated on this larger amount. Over time, this creates exponential growth — often called the "eighth wonder of the world."
The Formula
A = P(1 + r/n)nt
Where P = principal, r = annual rate (decimal), n = compounding frequency per year, t = years.
Monthly vs Annual Compounding
Monthly compounding gives you slightly more than annual because interest is applied more frequently. On $10,000 at 7% for 10 years: annual compounding yields ~$19,672 while monthly compounding yields ~$20,097 — a difference of $425.
Frequently Asked Questions
Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. This means your investment grows faster over time compared to simple interest.
A = P(1 + r/n)^(nt), where A is the final amount, P is the principal, r is the annual interest rate (as a decimal), n is the number of times interest is compounded per year, and t is the time in years.
The more frequently interest compounds, the more you earn. Daily compounding yields slightly more than monthly, which yields more than annual. In practice, the difference between daily and monthly is small for most savings rates.
The Rule of 72 is a quick way to estimate how long it takes to double your money. Divide 72 by your annual interest rate. At 6% per year, your investment doubles in roughly 72 ÷ 6 = 12 years.