Compound Interest Calculator — Calculate compound interest growth over time

Calculate how your investment or savings grows with compound interest. See the power of compounding over time.

Compound Interest Calculator

What Is Compound Interest and Why Does It Matter?

Compound interest is often called the eighth wonder of the world — and for good reason. Unlike simple interest which only calculates returns on the original principal, compound interest calculates returns on both the principal AND the accumulated interest. Over time, this creates exponential growth that dramatically outpaces simple interest, especially over long periods.

The Compound Interest Formula

The formula is: A = P × (1 + r/n)^(nt) — where A is the final amount, P is principal, r is annual rate, n is compounding frequency per year, and t is time in years. For example, $10,000 at 8% compounded monthly for 10 years becomes $22,196 — more than doubling your money.

How Compounding Frequency Affects Growth

More frequent compounding means slightly higher returns. Daily compounding gives you marginally more than annual compounding at the same rate. The difference is usually small, but over decades it becomes meaningful. For most savings accounts and investments, monthly compounding is standard.

Real-World Applications

  • Savings accounts and fixed deposits grow through compound interest
  • Investment portfolios benefit from reinvesting dividends (compounding)
  • Credit card debt compounds against you — minimum payments can trap you in debt
  • Student loans and mortgages use amortisation (a form of compounding)

FAQs — Compound Interest

What is the Rule of 72?
The Rule of 72 is a quick mental math shortcut: divide 72 by your annual interest rate to estimate how many years it takes to double your money. At 8% annual return, your money doubles in approximately 72÷8 = 9 years.
Does compound interest work for debt too?
Yes — and this is why high-interest debt is so dangerous. Credit cards often charge 20-30% APR compounded daily. If you only make minimum payments, the balance can grow faster than you pay it down. Use our Debt Payoff Calculator to plan your way out.
What's the difference between APR and APY?
APR (Annual Percentage Rate) is the stated interest rate before compounding. APY (Annual Percentage Yield) includes the effect of compounding and represents the actual annual return. APY is always equal to or higher than APR.