Compound Interest Calculator

Q: How often is interest compounded?

Common compounding frequencies: daily (most savings accounts and money market accounts), monthly (most CDs, some savings accounts), quarterly (some bonds), annually (some older investment products). More frequent compounding means slightly higher effective yields. Daily compounding at 5% APR has an effective annual yield (APY) of 5.127% vs. 5% for annual compounding.

Q: What is the difference between APR and APY?

APR (Annual Percentage Rate) is the stated rate without compounding. APY (Annual Percentage Yield) accounts for compounding frequency and shows the actual annual return. A savings account with 5% APR compounded daily has an APY of about 5.127%. Always compare APY when evaluating savings accounts and investments, it's the true return you'll earn.

Q: How much should I save each month to reach $1 million?

At 7% annual return (historical stock market average): to reach $1 million in 30 years, you need to invest about $820/month. In 25 years: ~$1,300/month. In 20 years: ~$2,150/month. The earlier you start, the less you need to contribute thanks to compounding. Use our calculator to find your exact monthly contribution for any savings goal.

Q: Does compounding work for debt too?

Yes, and it works against you. Credit card debt compounding at 20–30% APR grows very fast if you only pay minimums. A $5,000 credit card balance at 24% APR (2% monthly) minimum payments: it takes 22+ years to pay off and costs over $11,000 in interest. This is the same math as savings, but in reverse. Pay high-interest debt first.

Calculate how your savings or investments grow over time.

Updated October 2026

Investment Details

Initial Investment

$

Monthly Contribution

$

Annual Interest Rate

% / year

Compound Frequency

Time Period

years

Growth Summary

Final Balance$144,572.72

Summary

Total Contributions

$58,000.00

Total Interest Earned

$86,572.72

Final Balance

$144,572.72

Year-by-Year Growth

Year	Contributions	Interest	Balance
1	$12,400.00	$801.42	$13,201.42
2	$14,800.00	$1,834.27	$16,634.27
3	$17,200.00	$3,115.28	$20,315.28
4	$19,600.00	$4,662.39	$24,262.39
5	$22,000.00	$6,494.83	$28,494.83
6	$24,400.00	$8,633.24	$33,033.24
7	$26,800.00	$11,099.74	$37,899.74
8	$29,200.00	$13,918.03	$43,118.03
9	$31,600.00	$17,113.55	$48,713.55
10	$34,000.00	$20,713.58	$54,713.58
11	$36,400.00	$24,747.34	$61,147.34
12	$38,800.00	$29,246.20	$68,046.20
13	$41,200.00	$34,243.79	$75,443.79
14	$43,600.00	$39,776.14	$83,376.14
15	$46,000.00	$45,881.93	$91,881.93
16	$48,400.00	$52,602.60	$101,002.60
17	$50,800.00	$59,982.60	$110,782.60
18	$53,200.00	$68,069.60	$121,269.60
19	$55,600.00	$76,914.70	$132,514.70
20	$58,000.00	$86,572.72	$144,572.72

2026 Data

IRS-Sourced

Free Forever

How It Works

01

Enter Your Principal

Input your starting investment amount.

02

Set Rate & Term

Choose your interest rate and investment period.

03

See Your Growth

Visualize how your money compounds over time.

Understanding Compound Interest

How $10,000.00 grows at 5% annual interest with no additional contributions.

Time Horizon	Final Balance	Interest Earned
10 years	$16,288.95	$6,288.95
20 years	$26,532.98	$16,532.98
30 years	$43,219.42	$33,219.42

Impact of Compounding Frequency

$10,000.00 at 5% over 10 years, same rate, different compounding schedules.

Compounding Frequency	Final Balance	Interest Earned
Daily (365x/year)	$16,486.65	$6,486.65
Monthly (12x/year)	$16,470.09	$6,470.09
Quarterly (4x/year)	$16,436.19	$6,436.19
Annually (1x/year)	$16,288.95	$6,288.95

More frequent compounding earns slightly more. The difference between daily and annual compounding on this example is about $197.70.

Compound Interest FAQ

What is compound interest?

Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. Unlike simple interest, which only applies to the original amount, compound interest causes your balance to grow exponentially over time, often described as "interest on interest."

How does compound interest differ from simple interest?

Simple interest is calculated only on the original principal. For example, $10,000 at 5% simple interest earns $500 every year regardless of how long you invest. With compound interest, you earn $500 the first year, then $525 the second year (5% of $10,500), and so on. Over 30 years, $10,000 at 5% grows to $25,000 with simple interest but $43,219 with annual compounding.

How often should interest compound?

More frequent compounding produces slightly higher returns. For $10,000 at 5% over 10 years: daily compounding yields $16,487 versus $16,289 with annual compounding, a difference of about $198. Most savings accounts compound daily, while many CDs compound monthly or quarterly.

What is the Rule of 72?

The Rule of 72 is a quick way to estimate how long it takes to double your money. Divide 72 by your annual interest rate to get the approximate number of years. At 6%, your money doubles in about 12 years (72 / 6 = 12). At 8%, it takes roughly 9 years.

How do monthly contributions affect compound interest?

Regular monthly contributions dramatically accelerate growth because each new deposit also earns compound interest. Adding just $200/month to a $10,000 investment at 5% annual return yields roughly $94,000 after 20 years, compared to $26,533 without contributions. Starting early and contributing consistently is the most powerful wealth-building strategy.

How Compound Interest Works

Compound interest means you earn interest on your interest, not just your principal. The formula is A = P(1 + r/n)^(nt), where P is principal, r is annual rate, n is compounding frequency, and t is time in years. Daily compounding (used by most savings accounts) produces slightly more than monthly or annual compounding on the same rate.

Rule of 72

Divide 72 by your annual rate to estimate years to double. At 6%, your money doubles in 12 years. At 8%, in 9 years.

Compounding Frequency

Daily > monthly > quarterly > annually. More frequent compounding = slightly higher effective yield on the same APR.

Time Is the Key

$10,000 at 7% for 10 years = $19,672. For 30 years = $76,123. Starting earlier matters more than rate.

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Disclaimer: For informational purposes only. Not tax, legal, or financial advice.