Case 1
- Starting amount
- 1000
- Annual interest rate
- 10%
- For how many years?
- 1
- Compounding frequency
- Annually
1,100.00
Open with these valuesCompound Interest Calculator
1,100.00
Result: 1,100.00Compound interest is interest paid on interest already earned, so the balance grows faster the longer it is left alone. The rate you enter is the nominal yearly rate; the compounding frequency decides how often it is credited. This calculator grows a single deposit, with no further contributions.
Worked examples
Case 2
- Starting amount
- 10000
- Annual interest rate
- 5%
- For how many years?
- 10
- Compounding frequency
- Monthly
16,470.09
Open with these valuesCase 3
- Starting amount
- 1000
- Annual interest rate
- 10%
- For how many years?
- 1
- Compounding frequency
- Continuously
1,105.17
Open with these valuesHow it's calculated
A = P × (1 + r ÷ n)^(n × t) · continuous: P × e^(r × t)
- StepEnter the deposit and the nominal yearly rate the bank quotes.
- StepPick how often interest is credited to the balance.
- StepSet the number of years the money stays untouched.
- ResultRead the final balance, before inflation, tax and fees.
What this number means
This calculator answers one question: what a single deposit becomes if it is left alone at a fixed rate. It is the forward direction of the time value of money, and its neighbours are the same equation rearranged — solved for the rate it becomes CAGR, solved for the time it becomes the Rule of 72, and read backwards it becomes present value. The defaults show the mechanism only faintly: 1000 at 10 % for one year, credited annually, is 1100, a single payment of interest. Leave the same rate running for ten years and the balance is 2593.74, so the interest is 1593.74 rather than the 1000 that ten separate years of 100 would add up to. Those extra 593.74 are the interest the interest earned. Switch that default year to continuous compounding and 1100 becomes 1105.17, which is another way of saying the nominal 10 % carries an effective rate of 10.517 %. What the figure leaves out is money you add later. Every further deposit compounds on its own shorter clock, so a savings plan is a sum of many runs of this calculator rather than one. The assumption that costs the most is the flat rate: the formula treats one rate as holding for the entire term, which a real account, repriced whenever the bank chooses, never does. Read long horizons here as a shape, not as a forecast.
The rate is nominal, the frequency does the rest
The rate you enter is the yearly rate the bank quotes; the compounding frequency decides how often it is credited. The rate is divided by the periods and compounded over every one of them.
Frequency matters less than most people expect
At 5 % over ten years, 1000 becomes 1628.89 compounded yearly and 1648.72 compounded continuously. The first step from yearly to twice a year is worth more than every step after it.
One deposit, nothing added later
This calculator grows a single deposit, with no further contributions. The final balance is before inflation, tax and fees.
Commonly misread
12 % compounded monthly turns 1000 into 1120 after a year.
It becomes 1126.83, because the 12 % is credited as twelve steps of 1 % that each earn interest of their own.
Simple and compound interest come to the same thing.
Simple interest always uses the original principal and adds the same amount every period. Over a few months the difference is small; over decades it dominates.
Reference table
| Compounding | Periods per year | 1000 at 5 % after 10 years |
|---|---|---|
| Annually | 1 | 1628.89 |
| Twice a year | 2 | 1638.62 |
| Quarterly | 4 | 1643.62 |
| Monthly | 12 | 1647.01 |
| Daily | 365 | 1648.66 |
| Continuously | unlimited | 1648.72 |
Questions
What is compound interest?
Compound interest is interest earned on both the original principal and the interest already added to the balance. Because each period's interest joins the principal and earns interest itself, the balance grows faster over time than under simple interest. That interest-on-interest effect is why long horizons matter so much.
How do I calculate compound interest?
Use A = P × (1 + r ÷ n) to the power of n × t, where P is the principal, r the annual rate as a decimal, n the compounding periods per year and t the years. Subtract P from A to get the interest earned. At 12 % compounded monthly, 1000 becomes 1126.83 after one year rather than 1120.
What is the difference between compound and simple interest?
Simple interest is always calculated on the original principal, so it adds the same amount every period. Compound interest is calculated on the principal plus the interest accumulated so far, so the amount added grows each period. Over a few months the difference is small; over decades it dominates.
Does the compounding frequency change how much I earn?
Yes, but less than most people expect. At 5 % over ten years, 1000 becomes 1628.89 compounded yearly and 1648.72 compounded continuously — about 20 apart. The first step from yearly to twice a year is worth more than every step after it.
What is continuous compounding?
It is the mathematical limit of compounding infinitely often, given by A = P × e^(r × t) with e roughly 2.71828. It produces the highest balance a given nominal rate can reach, but only a fraction more than daily compounding. It appears mostly in financial theory rather than on savings accounts.
Sources and last check
Information, not financial advice.