Compound Interest Calculator

Interest That Earns Interest

Simple interest pays you a fixed amount each period based only on the original principal. Compound interest is different — each period's interest gets added to the balance, so the next period earns interest on a slightly larger amount. Over enough time, that difference compounds into a meaningfully larger total than simple interest would ever produce.

The Formula

A is the final amount, P is the principal, r is the annual interest rate (as a decimal), n is the number of times interest compounds per year, and t is the number of years. Interest earned is simply A − P.

Why Compounding Frequency Matters

• Savings accounts and CDs — banks advertise both a nominal rate and a compounding frequency; more frequent compounding produces a slightly higher effective return at the same nominal rate.
• Long time horizons — the compounding effect is small in year one but becomes the majority of total growth over 15–20+ years.
• Comparing products — a 5% rate compounded daily is not identical to 5% compounded annually; this calculator makes the difference explicit in dollar terms.

$10,000 at 5% for 10 Years, by Compounding Frequency

Notice how the gains from more frequent compounding shrink as frequency increases — the jump from annual to monthly is far larger than from monthly to daily.

How to Use This Calculator

1. Enter the Principal Amount you're starting with.
2. Enter the Annual Interest Rate as a percentage.
3. Enter the Number of Years the money will compound.
4. Choose the compounding frequency — annually, semi-annually, quarterly, monthly, or daily.
5. Select Calculate to see the final amount and total interest earned.

Related Calculations

To compare the effective annual return across compounding schedules directly, see the APY Calculator, or model regular contributions on top of a lump sum with the Investment Calculator.