How to use the compound interest calculator
- Enter your Starting amount (0 is fine) and your Monthly contribution.
- Type the Annual interest rate and pick how often it compounds. For a bank account, use the rate and compounding in its disclosure.
- Set Years to grow. Decimals work: 2.5 means two years and six months.
- Choose whether Contributions made at the start or end of each month. Start-of-month deposits earn one extra month of interest.
- Read the final balance, then scroll to the chart and the year-by-year table.
How the growth is calculated
With no deposits, the balance follows the standard compound interest formula:
A = P × (1 + r/n)n × t
P is the starting amount, r the annual rate, n the compounding periods per year and t the years. Because your deposits are monthly, the calculator steps month by month using the monthly equivalent of your rate, (1 + r/n)n/12 − 1, then adds the deposit. With monthly compounding that is simply r ÷ 12. This is the standard conversion financial calculators use when deposits and compounding follow different schedules. The simple interest box shows what the same deposits would earn if interest were paid only on money you put in, never on past interest.
Worked example
The calculator opens with $10,000 to start, $500 added at the end of each month, 7% compounded monthly for 20 years. You contribute $130,000.00 in total and the final balance is $300,850.72, so $170,850.72 is interest. The effective annual rate is 7.229%, and the Rule of 72 estimate for doubling is 10.3 years (9.9 years exactly). Simple interest on the same deposits would reach only $227,650.00, so compounding adds $73,200.72. Switch to start-of-month deposits and the balance rises to $302,370.09.
Limits and edge cases
- The rate stays fixed. Savings rates change and investment returns swing from year to year, so treat long projections as a range, not a promise.
- Taxes, fees and inflation are ignored. The inflation calculator shows what a future balance is worth in today's dollars.
- Contributions stay flat; you can model a raise by running a second scenario.
- A 0% rate is allowed and simply adds up your deposits. Years must be from 0.5 to 100.
To convert a quoted rate into APY, use the APY calculator. To work backward from a target, the savings goal calculator finds the monthly deposit you need.
Compound interest FAQ
How do I calculate compound interest?
Use A = P(1 + r/n)^(nt). For $10,000 at 7% compounded monthly for 20 years, that is 10,000 × (1 + 0.07/12)^240 = $40,387.39. Regular deposits each grow the same way from the month they are added, which is why the calculator steps through every month.
What is the Rule of 72?
Divide 72 by the annual rate to estimate how many years money takes to double. At 7% that gives 10.3 years; the exact answer with monthly compounding is 9.9 years. The shortcut is closest for rates between about 5% and 10%.
Does compounding frequency make a big difference?
Less than most people expect. A 7% rate gives an effective annual rate of 7.000% compounded yearly, 7.229% monthly and 7.250% daily. The rate itself and the number of years matter far more.
What interest rate should I use?
For savings accounts and CDs, use the APY your bank quotes today; the FDIC publishes national average rates every month. For stock investments, many planners test several rates, such as 5%, 7% and 9%, because returns are never guaranteed.
Sources: SEC Investor.gov compound interest calculator; FDIC national rates. Related reading: compound interest explained.