See how your money grows exponentially with the power of compounding.
A compound interest calculator shows how your savings or investments grow when interest earns interest over time. The formula used is:
A = P(1 + r/n)nt
Where A = final amount, P = principal, r = annual rate, n = compounding frequency per year, t = years. For example, $10,000 at 7% compounded monthly for 10 years grows to approximately $20,096.
Compound interest is calculated using A = P(1 + r/n)^(nt), where P is the principal, r is the annual rate, n is the number of compounding periods per year, and t is the number of years. The more frequently interest compounds, the more you earn.
What is the difference between simple and compound interest? +
Simple interest is calculated only on the original principal (I = P × r × t). Compound interest is calculated on both the principal and accumulated interest, resulting in exponential growth over time.
Which compounding frequency is best? +
More frequent compounding (daily vs. annually) yields slightly higher returns. For a 7% annual rate, daily compounding gives an effective rate of 7.25% vs. exactly 7% for annual compounding. The difference is small but adds up over decades.
How does the Rule of 72 work? +
Divide 72 by your annual interest rate to estimate how many years it takes to double your money. At 8% interest, your investment doubles in approximately 72 ÷ 8 = 9 years.