Compound Interest Calculator
Compound interest means you earn returns on your initial investment plus on any interest already earned. Over long periods, that effect can be large. This calculator shows the future value of a lump sum for a given rate, time, and compounding frequency—useful for savings and long-term investing.
Calculate compound growth
How it works
The formula for compound growth is FV = P × (1 + r/n)^(n×t), where P is principal, r is the annual rate (as a decimal), n is the number of compounding periods per year, and t is time in years. Interest is applied at each period to the current balance, not just the original principal.
Example: $10,000 at 5% per year, compounded monthly for 10 years: (1 + 0.05/12)^(12×10) ≈ 1.647, so the future value is about $16,470. The interest earned is about $6,470. If the same amount used simple interest (5% of $10,000 per year), you would get only $5,000 in interest over 10 years—compound interest yields more because of reinvestment.
When to use it
Use this for savings accounts, fixed deposits, or any investment that compounds at a stated rate. It illustrates why starting early and leaving money to compound matters. For debt, the same math shows how balances can grow when interest compounds and payments are low; use it to compare payoff strategies.
Frequently asked questions
- What is the difference between compound and simple interest? Simple interest is earned only on the initial principal. Compound interest is earned on principal plus previously earned interest, so growth accelerates over time.
- What does compounding frequency mean? It is how often interest is added to the balance (e.g. yearly, monthly). More frequent compounding (e.g. monthly) yields slightly higher growth for the same annual rate.
- Can I use this for debt? Yes. The same math applies to debt: interest compounds on the outstanding balance. Use it to see how quickly debt can grow if only minimum payments are made.