CodeKitHubWhat Is This Tool?
Compound interest is interest calculated on both the original principal and the interest already accumulated. Instead of earning the same flat amount every year, each period's interest is added to the balance, and the next period's interest is calculated on that larger balance. Over short terms the difference from simple interest is small; over decades it becomes the dominant force behind savings growth.
The core formula is A = P × (1 + r/n)^(n×t), where P is the principal, r the annual rate as a decimal, n the number of compounding periods per year and t the term in years. When you add regular monthly deposits, each deposit starts compounding from the moment it is added, which is why starting early matters more than depositing more later. This calculator handles both parts and shows the combined result.
Why Use It?
- Supports five compounding frequencies — yearly, half-yearly, quarterly, monthly and daily — so you can match the terms of a real savings account or deposit.
- Optional monthly deposit input models regular saving plans, not just a single lump sum.
- Splits the result into final balance, total interest earned and total contributions, so you can see exactly how much of the end amount is growth.
- A year-by-year table shows the opening balance, interest earned and closing balance for each year — the compounding curve in numbers.
- Free and instant, and nothing is sent anywhere: the calculation runs entirely in your browser, so your financial figures stay on your device.
How to Use
- Enter your starting principal — the amount you begin with.
- Enter the annual interest rate as a percentage, and the term in years.
- Choose the compounding frequency: yearly, half-yearly, quarterly, monthly or daily.
- Optionally enter a monthly deposit to model regular contributions.
- Press the calculate button and read the final balance, total interest and the year-by-year breakdown.
Example
Input
Principal 10,000, annual rate 5%, 10 years, compounded monthly, no extra depositsOutput
Final balance 16,470.09 — total interest 6,470.0910,000 × (1 + 0.05/12)^120 = 16,470.09. With yearly compounding the same inputs give 16,288.95 — more frequent compounding earns slightly more at the same nominal rate.
Same rate, different frequency: what actually changes
The table shows why banks advertise the compounding frequency in the small print: daily compounding sounds impressive but adds only about 1.2% extra over ten years compared with yearly compounding at the same nominal rate. When comparing two offers, a higher nominal rate almost always beats a more frequent compounding schedule — check the effective annual rate if you want a single number that accounts for both.
| Compounding frequency | Final balance (10,000 at 5%, 10 years) | Effective annual rate |
|---|---|---|
| Yearly | 16,288.95 | 5.000% |
| Half-yearly | 16,386.16 | 5.063% |
| Quarterly | 16,436.19 | 5.095% |
| Monthly | 16,470.09 | 5.116% |
| Daily | 16,486.65 | 5.127% |
Where this fits in real planning
Compound interest answers the saving question: what does money become if you leave it alone or add to it monthly. The mirror-image question — what does borrowing cost when you repay in fixed installments — is amortization, and the Loan Calculator handles that side, including how much of each payment is interest.
If you just need the percentage arithmetic around a result — what percent of the final balance is interest, or how a rate change of half a point compares — the Percentage Calculator does those one-line calculations faster than editing scenario inputs here.
Frequently Asked Questions
How is compound interest calculated?
The lump-sum part uses A = P × (1 + r/n)^(n×t): principal times (1 plus the rate per period) raised to the total number of periods. Monthly deposits are added on top: each deposit compounds from the month it is made until the end of the term. The calculator sums both parts to produce the final balance.
What difference does the compounding frequency make?
At the same nominal annual rate, more frequent compounding earns slightly more, because interest starts earning interest sooner. The effect is real but modest: 10,000 at 5% for 10 years grows to 16,288.95 compounded yearly, 16,470.09 monthly and 16,486.65 daily. Frequency matters far less than the rate itself and the length of the term.
How are monthly deposits handled?
Each monthly deposit is treated as being added at the end of its month and then compounds for the remaining months of the term. This matches the standard future-value-of-annuity convention used by most banks and financial calculators. Because later deposits have less time to grow, the first years of a savings plan contribute disproportionately to the final balance.
Can I use this for loans or inflation?
The math of compounding is the same, so you can estimate how a debt grows if left unpaid, or divide by an inflation factor mentally. But loan repayment schedules involve fixed payments that reduce principal each month — for that, an amortizing loan calculator is the right tool, not a compound interest calculator.
Is this investment advice? Is my data stored?
No on both counts. This is a mathematical estimation tool: real accounts have taxes, fees, variable rates and market risk that a formula cannot capture, so treat results as illustrations, not projections — consult a qualified financial adviser for actual decisions. All calculation happens locally in your browser; the numbers you enter are never sent, stored or logged.