Compound Interest Calculator

This calculator shows the one financial mechanism most worth understanding: money earning interest, and that interest then earning interest of its own. Give it a lump sum, a rate, a compounding frequency, and a horizon, and it returns the future value — alongside a simple-interest comparison that isolates exactly how many dollars the "interest on interest" effect contributed.

The comparison line is the point. Over one year, compound and simple interest look nearly identical; over ten years the gap is noticeable; over thirty it dominates. In the default example, $10,000 at 5% earns about $6,470 compounded versus $5,000 simple — nearly $1,500 of growth that came from nothing but time and reinvestment. That gap is why the same rate produces wildly different outcomes depending on how long you leave money alone.

The calculator splits your annual rate across the compounding periods in a year — twelve for monthly, 365 for daily — and applies that per-period rate to the running balance once per period. Because each period's interest is calculated on a balance that already includes previous interest, growth accelerates: the curve on the chart bends upward instead of rising in a straight line.

The chart plots the balance at each year-end so you can watch the bend develop. In early years the line looks almost straight; the visible curvature in later years is compounding becoming the dominant force.

The formula is the classic FV = P × (1 + r/n)^(n×t), where P is your starting amount, r the annual rate as a decimal, n the number of compounding periods per year, and t the years. Total interest is FV − P. The simple-interest comparison uses P × r × t — the same rate with no reinvestment — so the difference between the two is purely the compounding effect.

Assumptions: the rate stays constant for the entire horizon, nothing is deposited or withdrawn along the way, and the result ignores taxes and inflation. Real accounts rarely hold one rate for decades, so treat multi-decade projections as illustrations of the mechanism rather than forecasts — the shape of the curve is reliable even when the endpoint isn't.

Judge the inputs, not the output. A 4–5% rate is realistic today for cash in a high-yield savings account or CD; the 0.05% that big branch banks pay turns this entire exercise into a rounding error — $10,000 at 0.05% earns about $50 in a decade versus roughly $6,470 at 5%. If your projected interest looks negligible, the rate is almost always the culprit, and it's the easiest input to actually change.

The other honest reading is about horizon. If your money will sit for under three years, compounding frequency and even small rate differences matter little — pick the safe, liquid option. Past ten years, the curve's bend does most of the work, which cuts both ways: starting five years earlier often beats finding a slightly higher rate, and cash rates of 4–5% will lag what diversified investments have historically returned, so a savings product may be the wrong vehicle for truly long-term money.