Compound Interest Calculator
See how compound interest grows your savings over time with different compounding frequencies.
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Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. Unlike simple interest, it grows exponentially — and more frequent compounding means more growth. This calculator shows the exact impact of different compounding frequencies on your savings.
Example
$10,000 at 5% for 10 years: Annual compounding: $16,289 (+$6,289) Monthly compounding: $16,470 (+$6,470) Daily compounding: $16,487 (+$6,487) APY (monthly): 5.116% vs nominal 5%
Formula
A = P × (1 + r/n)^(n×t) A = Final amount P = Principal r = Annual rate (decimal) n = Compounding frequency per year t = Time in years APY = (1 + r/n)^n − 1
Simple vs Compound Interest
Simple interest: Interest = Principal × Rate × Time (interest never earns interest) Compound interest: each period's interest is added to principal before calculating next period's interest At 5% for 30 years: simple interest doubles your money once. Compound interest (monthly) grows it 4.5×. The difference is enormous at long time horizons.
Frequently Asked Questions
What compounding frequency should I use?
For savings accounts and CDs, use the frequency your bank specifies — often daily or monthly. For stocks/investments, annual or monthly is a reasonable approximation.
What is APY vs APR?
APR (Annual Percentage Rate) is the nominal rate. APY (Annual Percentage Yield) accounts for compounding — it's always ≥ APR. The more frequent the compounding, the higher the APY vs APR.
Why does daily compounding barely differ from monthly?
After monthly, the gains from more frequent compounding diminish rapidly. Going from monthly (12×) to daily (365×) adds only a small amount — most of the compounding benefit is captured at monthly.
Does this include monthly contributions?
No — this is for a lump sum only. For monthly contributions use the Investment Return Calculator.