Compound Interest Calculator interactive tool
Calculator
Result
$32,063.02
+$10,063.02
$22,000.00
What Is Compound Interest?
Compound interest is the interest you earn on both your initial principal and on the interest you've already accumulated. Over time, this compounding effect causes your balance to grow at an accelerating rate—often called the "snowball effect."
The Magic of Compounding
Unlike simple interest, which only pays out on the original amount you invested, compound interest reinvests your earnings. The frequency of compounding matters significantly:
- Annual Compounding: Interest is calculated and added once per year.
- Monthly Compounding: Interest is calculated and added 12 times per year, resulting in faster growth.
- Daily Compounding: Yields the highest return over time as interest is added every single day.
When to Use This Tool
This calculator is perfect for projecting the future value of savings accounts, certificates of deposit (CDs), or long-term investments. By adjusting your monthly contributions and the expected rate of return, you can set realistic financial goals and see exactly how long it will take to reach them.
How To Use the Compound Interest Calculator
- Enter your initial investment or savings amount.
- Enter the expected annual interest rate and number of years.
- Optionally add a regular monthly contribution.
- Choose how often interest compounds (e.g., monthly or annually).
- Review the future value and total interest earned.