Compound Interest Calculator

Compound interest pays interest on your interest, not just on your original deposit. Each period the balance grows, and the next period's interest is calculated on that larger balance rather than the original amount. Over a few months the effect is small, but it accelerates over years, and most of the total growth in a long-term account arrives in its final stretch, which is why starting earlier tends to matter more than contributing a little extra later.

Simple interest is calculated only on the original principal for the life of the loan or deposit, so it grows in a straight line. Compound interest recalculates each period on the principal plus any interest already added, so it grows on a curve that gets steeper over time. Over short periods the two produce similar numbers; over many years compound interest pulls noticeably ahead, which is why savings and investment accounts almost always compound rather than accrue simple interest.

Less than most people expect. On $10,000 at 7% for 10 years with no added contributions, annual compounding reaches $19,671.51, monthly reaches $20,096.61, and daily reaches $20,136.18, a gap of under $500 between the least and most frequent options. The stated rate and the length of time invested both move the balance far more than compounding frequency does. Comparing accounts by their APY, which already folds compounding frequency into one number, avoids the comparison entirely.

The Rule of 72 estimates how many years it takes an investment to double at a given fixed annual rate: divide 72 by the interest rate. At 6%, that's 72 divided by 6, or about 12 years; at 9%, about 8 years. It's an approximation, not an exact formula, and it gets less accurate at very high rates, but it's a fast way to size up an investment's growth without running the full compound interest formula.

APR is the nominal annual rate before compounding is factored in, the number this calculator's rate field asks for. APY is the actual return you'd earn over a year once compounding is applied, and it's always equal to or higher than the APR for the same account. A 7% APR compounded monthly works out to roughly a 7.23% APY; the gap widens as compounding gets more frequent. U.S. banks are legally required to disclose APY, not just APR, on savings products.

Most U.S. banks compound savings account interest daily and credit it to the balance monthly, even though the rate is advertised as an annual figure. Certificates of deposit more commonly compound monthly or quarterly, spelled out in the account's disclosure. The compounding frequency field on this calculator only changes the result meaningfully at high rates or over long terms; at typical savings rates the difference between daily and monthly is a few dollars a year on a modest balance.

It depends entirely on the rate. At a typical long-run stock market average near 7% to 10% a year, doubling takes roughly 7 to 10 years by the Rule of 72. At a savings account rate closer to 2%, doubling takes about 36 years. Regular contributions on top of a lump sum shorten that timeline further, since new money starts compounding immediately rather than waiting for the original balance to double on its own.

Yes, and credit cards are the clearest example. Card issuers generally compound interest daily by dividing the APR by 365 to get a daily periodic rate, then applying it to the balance including any interest already added. At an average card APR in the low-to-mid 20s, an unpaid balance grows the same way a compounding investment does, just in the wrong direction, which is why interest-only minimum payments can barely dent a balance over time.

Both matter, but which one dominates depends on the time horizon. Over a short period, your own contributions make up most of the balance because there hasn't been enough time for compounding to add much. Over a multi-decade horizon, the rate and the length of time invested tend to overtake contribution size, since compounding on the earliest dollars has decades to work. Starting contributions earlier, even small ones, generally outperforms waiting to contribute more.

Compounding is exponential, so the dollar amount of growth in any given year depends on how large the balance already is, and the balance is always smallest at the start. A balance growing at 7% a year adds roughly the same percentage every year, but that percentage is applied to a steadily larger number, so the last few years of a long-term projection typically add more in dollar terms than the first several years combined.

This calculator assumes a fixed, steady rate the entire term, which describes a savings account or CD reasonably well but not a stock market investment, where returns vary year to year and can be negative in any given year. Long-run historical averages are a reasonable planning input, but they smooth over real volatility along the way. FDIC-insured deposit accounts guarantee the principal and stated rate up to insurance limits; market investments do not.

Time value of money is the principle that a dollar today is worth more than the same dollar later, because it can be invested and grow in the meantime. Compound interest is the mechanism that makes that true: money put in earlier has more compounding periods ahead of it, which is exactly why this calculator's worked example shows a dollar contributed in year one outgrowing a dollar contributed in the final year, even though both are the same dollar amount.

For a savings account or CD, use the actual APY the bank discloses. The FDIC's national average savings rate has sat near 0.4% through 2026, while competitive online high-yield savings accounts have advertised APYs several times higher, so it's worth checking your specific account's disclosure rather than assuming a national average applies. For long-term investing, many planners use a broad historical stock market average, commonly cited in the 7% to 10% range before inflation, as a planning estimate, not a promise.

No. It projects nominal growth at the rate you enter and doesn't subtract taxes or adjust for inflation. Interest credited to a regular savings account, CD, or bond is generally taxable income in the year it's paid, whether or not you withdraw it, under IRS rules on interest income. Inflation separately erodes purchasing power over the same years the balance is compounding, so a rate that beats inflation is what actually builds real wealth. Tax-advantaged accounts like a 401(k), traditional IRA, or Roth IRA can defer or eliminate that tax drag, which is worth weighing separately from this projection.

It depends on the account. A savings account or CD compounds automatically: the bank credits interest straight back into the balance, which is exactly what this calculator assumes. A taxable brokerage account holding dividend-paying stocks or funds usually doesn't reinvest on its own unless you enroll in a dividend reinvestment plan; otherwise the dividend gets paid out as cash and stops compounding. If you're using this calculator to project a brokerage account, confirm reinvestment is actually turned on, or the real result will trail the projection.