Money & Finance
Compound Interest Calculator
Compound interest causes an investment or savings balance to grow faster over time than simple interest, since each period's interest is calculated on a balance that already includes previously earned interest.
The formula
future value = principal × (1 + rate ÷ n)^(n × time)
where n is the number of times interest compounds per year.
Worked example
$10,000 invested at 6% annual interest, compounded monthly, for 10 years:
future value = 10,000 × (1 + 0.06 ÷ 12)^(12 × 10) ≈ $18,193.97
interest earned ≈ $8,193.97
Frequently asked questions
What is compound interest?
Compound interest is interest calculated on both the original principal and the accumulated interest from previous periods, so earnings grow faster over time compared to simple interest, which only applies to the original principal.
What does "compounds per year" mean?
This is how often interest is calculated and added to the balance each year — for example, 12 for monthly compounding, 4 for quarterly, 1 for annually, or 365 for daily. More frequent compounding produces a slightly higher return for the same nominal rate.
Does this account for additional contributions over time?
No — this calculator assumes a single lump-sum principal with no additional deposits. For a running series of contributions plus interest, you'd need a savings-with-contributions calculator instead.