--- title: "Compound Interest Calculator | Method Calculator" description: "See how savings or investments grow with compound interest. Choose the compounding frequency, add monthly contributions and view a year-by-year table." canonical_url: "https://methodcalculator.com/compound-interest-calculator" meta: "og:description": "See how savings or investments grow with compound interest. Choose the compounding frequency, add monthly contributions and view a year-by-year table." "og:image": "https://methodcalculator.com/_og/s/o_a83742c3db6fadaa.png" "og:image:height": "600" "og:image:type": image/png "og:image:width": "1200" "og:title": "Compound Interest Calculator – Free Online Tool" "twitter:image": "https://methodcalculator.com/_og/s/o_a83742c3db6fadaa.png" --- > Index of every page on this site: [llms.txt](https://methodcalculator.com/llms.txt) # **Compound Interest Calculator** Project how a lump sum and regular monthly deposits grow when interest is reinvested. Pick the compounding frequency your account uses and see the balance, total interest and a year-by-year table. ## **Result** Final balance **$31,998.32**
Total deposits (initial + contributions)
$22,000.00
Total interest earned
**$9,998.32**
Effective annual yield (APY)
5.116%
**Growth by year** | **Year** | **Deposits** | **Interest earned** | **Balance** | | --- | --- | --- | --- | | 1 | $1,200.00 | $539.50 | $11,739.50 | | 2 | $1,200.00 | $628.50 | $13,568.01 | | 3 | $1,200.00 | $722.05 | $15,490.06 | | 4 | $1,200.00 | $820.39 | $17,510.44 | | 5 | $1,200.00 | $923.75 | $19,634.20 | | 6 | $1,200.00 | $1,032.41 | $21,866.60 | | 7 | $1,200.00 | $1,146.62 | $24,213.23 | | 8 | $1,200.00 | $1,266.68 | $26,679.91 | | 9 | $1,200.00 | $1,392.88 | $29,272.79 | | 10 | $1,200.00 | $1,525.54 | $31,998.32 | ## What is compound interest? Compound interest is interest earned on interest. After each compounding period the interest is added to the balance, so the next period's interest is calculated on a larger amount. Over long periods this snowball effect is what makes early saving so powerful, and it is also why credit card debt grows so quickly when only minimum payments are made. ## Compound interest formula **A = P × (1 + r ÷ n)n × t** - **A** = final amount, **P** = initial deposit - **r** = annual rate as a decimal, **n** = compounding periods per year - **t** = years **Example:** $10,000 at 5% compounded monthly for 10 years: A = 10,000 × (1 + 0.05 ÷ 12)120 = 10,000 × 1.6470 = **$16,470.09**. With an extra $100 deposited at the end of every month, the deposits themselves grow as a series: 100 × ((1.004167)120 − 1) ÷ 0.004167 = $15,528.23. The total balance is $31,998.32, of which $22,000 is money you put in and $9,998.32 is interest. ## How to use this calculator 1. Enter your starting balance and the annual interest rate (APR) your account pays. 2. Choose how often interest is credited. Most savings accounts compound daily or monthly. 3. Set the number of years and any amount you will add each month. 4. Use the yearly table to see when interest starts to outpace your own deposits. ## Tips - Time matters more than amount: $100 a month from age 25 beats $200 a month from age 40 at the same rate. - For investments, enter an expected average annual return instead of a bank rate, and remember returns vary year to year. - Inflation erodes real growth. A 5% return with 3% inflation is roughly 2% in purchasing power. - Loans compound against you; see the [loan calculator](https://methodcalculator.com/loan-calculator) for the cost of borrowing, and the [simple interest calculator](https://methodcalculator.com/simple-interest-calculator) for interest that does not compound. ## **Frequently asked questions ** ### **What is the difference between APR and APY?** APR is the nominal yearly rate before compounding. APY (annual percentage yield) is what you actually earn in a year once compounding is included. At 5% compounded monthly the APY is 5.116%; compounded daily it is 5.127%. Banks advertise APY on savings so that accounts with different compounding can be compared. ### **How often does compounding matter?** Less than most people expect. On $10,000 at 5% for 10 years, annual compounding gives $16,289, monthly $16,470 and daily $16,487. The rate and the time invested matter far more than the compounding frequency. ### **What is the rule of 72?** Divide 72 by the annual interest rate to estimate how many years money takes to double. At 5% that is about 14.4 years; at 8% about 9 years. It is a quick approximation that works well for rates between roughly 4% and 12%. ### **Are the contributions added at the start or end of each month?** At the end of each month, after interest for that month is credited. This is the common assumption for savings plans and gives a slightly lower result than start-of-month deposits. Over 10 years of $100 deposits at 5% the difference is about $65. ## **Related calculators ** - [**Simple Interest Calculator**](https://methodcalculator.com/simple-interest-calculator) - [**Loan Calculator**](https://methodcalculator.com/loan-calculator) - [**Mortgage Calculator**](https://methodcalculator.com/mortgage-calculator) - [**Percentage Calculator**](https://methodcalculator.com/percentage-calculator) ```json {"@context":"https://schema.org","@graph":[{"@id":"https://methodcalculator.com/#website","@type":"WebSite","description":"Free online calculators for finance, health and fitness, math and everyday life. 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