What is a Compound Interest Calculator?
Compound interest means interest is paid on interest. Each period the balance is multiplied by one plus the period rate, so the growth is geometric rather than linear, and the gap between simple and compound interest widens with every period. The standard formula is A = P(1 + r/n)^(nt), where P is the starting amount, r the annual nominal rate, n the compounding periods per year and t the number of years.
The compounding frequency matters more than most people expect. Ten per cent compounded annually gives an effective rate of 10%; the same nominal 10% compounded monthly gives 10.47%, and compounded daily gives 10.52%. That is why banks in most jurisdictions are required to publish the effective annual rate, and why the tool reports it alongside the nominal figure you typed.
Regular deposits complicate the arithmetic but not the concept: each deposit joins the balance and then compounds for however many periods remain. Two details change the result. The deposit frequency need not match the compounding frequency — monthly deposits into a daily-compounded account is the normal case — and whether a deposit lands at the start or the end of a period decides whether it earns that period's interest. Depositing at the start is worth measurably more over a long horizon.
How to calculate compound interest
- Enter the starting amount — the lump sum you have today. Enter 0 if you are starting from nothing and only contributing.
- Enter the annual rate as a percentage, and the number of years you are projecting over.
- Choose how often interest compounds. Monthly matches most savings accounts; daily matches many deposit products; annually is the conservative assumption.
- Add a regular deposit and its frequency. Leave it at 0 for a single lump sum with no further contributions.
- Decide whether deposits land at the start or the end of each period. Start is realistic for a standing order that leaves your account on payday.
- Optionally enter an inflation rate to see the final balance in today's money, which is usually far less dramatic than the headline figure.
Compound Interest Calculator limits and rules
| Item | Limit |
|---|---|
| Start amount | A single lump sum, entered with no thousands separators |
| Rate | A constant annual nominal rate — no year-to-year variation is modelled |
| Compounding | Annually, semi-annually, quarterly, monthly, weekly or daily |
| Deposits | A constant amount at a chosen frequency, independent of the compounding frequency |
| Timing | Start of period or end of period, which changes the result for every deposit after the first |
| Effective annual rate | Reported so the nominal figure can be compared across products |
| Inflation | Optional; discounts the final balance to present-day money |
| Doubling time | From the rule-of-72 relationship, log(2) / log(1 + r) |
| Currency | A display symbol only; no conversion is performed |
| Not included | Tax on interest or gains, platform and fund fees, contribution limits and rate changes over the term |
When to use it
- Projecting what a monthly standing order into a savings account becomes over ten or twenty years, including the effect of the compounding frequency.
- Comparing an account that compounds monthly with one that compounds annually at the same nominal rate, using the effective annual rate the tool reports.
- Checking what a bonus or an inheritance would grow into if left untouched, and then comparing that with the same amount drip-fed monthly.
- Seeing how much of a projected balance is contributions rather than growth, which is the figure that matters when deciding whether a rate is worth switching for.
- Stripping inflation out of the headline number to see whether the real value of the pot actually rises.
Is it private?
Everything runs inside your browser. Your text and files are never uploaded, never stored and never seen by anyone else — including me. You can use the tool with the network tab open and watch no request leave the page. Closing the tab erases the input.
Frequently asked questions
Simple interest is paid only on the original amount, so it grows linearly. Compound interest is paid on the accumulated balance, so it grows geometrically. Over one year the two are close; over twenty years the difference is enormous, which is the whole reason compounding is described as the eighth wonder of the world.
No, but it changes what that nominal rate actually earns. The effective annual rate is what you receive: 10% nominal compounded monthly is 10.47% effective, and compounded daily is 10.52%. Since the nominal figure is what gets advertised, the effective figure is the one worth comparing.
It does, though the effect is modest in percentage terms and grows with the horizon. A deposit made at the start of a period earns that period's interest; one made at the end does not. Over thirty years of monthly deposits, that one period's difference on each deposit compounds into a meaningful sum.
It reduces the spending power of the final figure rather than the number itself. At 3% a year over 30 years, prices roughly double, so a £100,000 balance would buy what about £41,000 buys today. The tool reports that present-value figure separately so both numbers can be read together.
Not directly — a loan amortises, meaning the balance falls rather than compounds upward. Use the loan EMI calculator instead, which walks the declining balance month by month and reports the total interest paid.
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Written and maintained by Md. Nur Hossain Repon.