Compound Interest Calculator: How Money Grows On Itself
Compound interest is interest earned on your interest. This calculator projects a starting balance forward using an annual rate, a number of years and a compounding frequency, so you can see the final balance and how much of it is growth rather than the money you put in.
Why compounding frequency matters
The more often interest is added to the balance, the sooner it starts earning interest itself. At 6% a year, annual compounding gives 6.00% effective growth, monthly compounding gives about 6.17%, and daily compounding gives about 6.18%. The gap widens as rates rise, which is exactly why high-rate credit card debt compounds so painfully.
Time beats amount
Compounding is exponential, so the last years of a long investment produce far more growth than the first. Money invested at 25 and left for forty years typically ends up worth several times the same amount invested at 45. If you can only change one variable, change how early you start rather than how much you put in.
Real returns and inflation
A projection at a nominal rate ignores inflation. If your investment grows at 7% while prices rise 3%, your real buying power grows at roughly 4%. For long-term planning, run the calculator twice — once at the nominal rate and once at the inflation-adjusted rate — so you know both the headline number and what it will actually buy.
Common uses
- Projecting a savings account, ISA, 401(k) or pension pot.
- Estimating how long a lump sum takes to double (divide 72 by the rate for a quick answer).
- Understanding the cost of carrying a revolving balance on a credit card.
Key takeaways — Compound Interest Calculator
- Growth = principal × (1 + rate/n)^(n × years); n is the compounding periods per year.
- More frequent compounding raises the effective rate, but time in the market matters more.
- Subtract inflation to see what the final balance is really worth.