Compound Interest Calculator — Free Online Tool
Compound interest is interest earning interest on itself — the engine behind long-term investing. Enter your starting amount, rate, and time horizon to project your future balance.
What is the Compound Interest Calculator?
With simple interest you earn only on the original principal. With compound interest, each period's interest is added to the balance, so the next period earns on a bigger base. Over years and decades the difference is enormous: at 7% annual compounding, money roughly doubles every 10 years (the “rule of 72”: divide 72 by your rate to estimate doubling time).
Compounding frequency matters too — monthly compounding beats annual compounding at the same nominal rate, because interest starts earning sooner. That's why this calculator lets you compare frequencies side by side. The biggest lever, though, is time: starting ten years earlier usually beats earning a slightly higher rate.
How to use this calculator
- Enter your initial principal (starting amount).
- Enter the annual interest rate as a percent.
- Enter the number of years you'll let it grow.
- Choose the compounding frequency and click Calculate.
Formula
Frequently asked questions
What is the difference between APR and APY?
APR is the nominal yearly rate; APY includes compounding, so it's the rate you actually earn. Monthly compounding at 6% APR gives about 6.17% APY.
How often should interest compound for the best return?
More frequent compounding always helps, but the gains shrink quickly — daily vs monthly at 5% differs by only about 0.01% APY.
Does this include taxes or inflation?
No. The projection is before taxes, fees, and inflation. Real (inflation-adjusted) returns are lower than nominal ones.
What is the rule of 72?
Divide 72 by your annual rate to estimate years to double your money. At 8%, money doubles in roughly 9 years.