What is the compound interest formula?

A = P(1 + r/n)^(nt), where P is the starting amount, r the annual rate as a decimal, n the number of compounding periods per year and t the number of years.

What is the difference between simple and compound interest?

Simple interest is calculated only on the original amount. Compound interest is calculated on the original amount plus interest already added.

Does compounding more often make a big difference?

It helps, but with diminishing returns. In the example, going from annual to monthly adds about 285, while going from monthly to daily adds about 26.

What is the rule of 72?

A shortcut for the doubling time: divide 72 by the annual percentage rate. At 6% it is about 12 years.

Compound Interest Calculator

See how a lump sum grows with interest on interest, at any compounding frequency.

Updated September 19, 2026Checked by the editorial team

Starting amount (principal)

Currency symbol

Monthly contribution

Optional. Leave at 0 for a single lump sum.

Annual interest rate

Years

Compounding

Balance at the end

$38,696.84

Total you put in: $10,000.00
Interest earned: $28,696.84
With simple interest instead: $24,000.00

Interest is added once a year. Taxes, fees and inflation are not included.

Year-by-year growth

Year	Total put in	Interest so far	Balance
1	$10,000.00	$700.00	$10,700.00
2	$10,000.00	$1,449.00	$11,449.00
3	$10,000.00	$2,250.43	$12,250.43
4	$10,000.00	$3,107.96	$13,107.96
5	$10,000.00	$4,025.52	$14,025.52
6	$10,000.00	$5,007.30	$15,007.30
7	$10,000.00	$6,057.81	$16,057.81
8	$10,000.00	$7,181.86	$17,181.86
9	$10,000.00	$8,384.59	$18,384.59
10	$10,000.00	$9,671.51	$19,671.51
11	$10,000.00	$11,048.52	$21,048.52
12	$10,000.00	$12,521.92	$22,521.92
13	$10,000.00	$14,098.45	$24,098.45
14	$10,000.00	$15,785.34	$25,785.34
15	$10,000.00	$17,590.32	$27,590.32
16	$10,000.00	$19,521.64	$29,521.64
17	$10,000.00	$21,588.15	$31,588.15
18	$10,000.00	$23,799.32	$33,799.32
19	$10,000.00	$26,165.28	$36,165.28
20	$10,000.00	$28,696.84	$38,696.84

Compound interest means you earn interest on your interest. Enter a starting amount, a rate, a term and how often interest is added, and the calculator shows the final balance next to the simple interest result.

You can add regular contributions if you want, or leave them at zero for a pure lump sum.

How compound interest calculator works

At each compounding date, interest is calculated on the current balance, including all interest added before. More frequent compounding gives a slightly higher result at the same annual rate, but the gain shrinks quickly: monthly and daily compounding are close.

The comparison line shows what the same money would earn under simple interest, where interest is only ever calculated on the original amount.

The formula

A  =  P × (1 + r ÷ n)^(n × t)
P = starting amount,  r = annual rate (decimal),  n = compounds per year,  t = years
Simple interest:  A = P × (1 + r × t)

Rule of 72: divide 72 by the annual rate in percent to estimate the years needed to double, roughly.

Worked example: 10,000 at 6% for 10 years

Compounded annually: 10,000 × 1.06^10 = 17,908.48.

Compounded monthly: 18,193.97. Compounded daily: 18,220.29.

Simple interest would give 10,000 × (1 + 0.06 × 10) = 16,000.

The rule of 72 says 72 ÷ 6 = 12 years to double. The exact figure is about 11.9.

When to use this tool

Projecting a lump-sum investment or a fixed-term deposit.
Understanding why starting early has such a large effect.
Comparing accounts that compound at different frequencies.
Seeing how much a debt grows when interest is capitalised and no payments are made.

Common mistakes to avoid

Comparing nominal rates that compound at different frequencies without adjusting for the difference.
Using a rate in percent as a decimal, typing 6 in a formula that expects 0.06.
Expecting returns from investments to be steady. This models a fixed rate, which real investments do not offer.

Frequently asked questions

What is the compound interest formula?: A = P(1 + r/n)^(nt), where P is the starting amount, r the annual rate as a decimal, n the number of compounding periods per year and t the number of years.
What is the difference between simple and compound interest?: Simple interest is calculated only on the original amount. Compound interest is calculated on the original amount plus interest already added.
Does compounding more often make a big difference?: It helps, but with diminishing returns. In the example, going from annual to monthly adds about 285, while going from monthly to daily adds about 26.
What is the rule of 72?: A shortcut for the doubling time: divide 72 by the annual percentage rate. At 6% it is about 12 years.

Learn more

Results are for information only and are not financial, legal or medical advice. The calculation logic is covered by automated tests, and examples on this page are worked out and re-checked before publishing. Spotted a mistake? Tell us.