Compound Interest Calculator

By Pam O’Brien | Updated Sept 28, 2026

Use our compound interest calculator to see how your savings could grow faster by earning interest on both your initial deposit and the accumulated interest over time.

*Actual interest credited by your financial institution may vary based on institution-specific calculation methodology.

Calculator Definitions

Before using a compound interest calculator, it’s important to understand the different metrics you’ll need to fill in. They are:

• Initial Deposit: The amount of money you first put into your interest earning account. The larger it is, the more you may earn from interest. In addition, some financial institutions require a specific dollar amount for your first deposit to open the account or secure a higher interest rate.

• Monthly Contribution: The amount of money you expect to add to the account each month.

• Time to Grow: The number of years and months you plan to save the money in the account so it can grow

• Expected Rate of Return: What you estimate the interest rate for the account will be.

• Compound Frequency: The number of times per year that the interest will be calculated and compounded on the account. Depending on the account, interest might be compounded daily, monthly, quarterly, or annually, for instance.

• Interest Earned: The total amount of interest that accumulates on your initial deposit and any additional contributions over the specified time period. You can calculate this figure with the estimated rate of return, the compounding frequency, and the savings time period. Higher interest rates generally create more earnings.

• Total Contributions: Total contributions represent the sum of your initial deposit and all the monthly contributions made over the specified time period. It gives you a clear picture of how much money you have contributed to the account.

What Is Compound Interest?

There are key differences between compound interest vs. simple interest. Simple interest is the interest that accrues on an initial amount of money deposited in a savings account (aka the principal). If you multiply the principal by the interest rate earned on the money over a year, you get the simple interest amount. For example, if you deposited $1,000 in a savings account that has an interest rate of 1%, in a year you would earn $10 in simple interest.

By comparison, compound interest is a method in which interest is added to the principal and interest is earned on the principal plus that added interest. For example, if you deposited $1,000 in a savings account and it earned $10 of interest in the first month, you’d have $1,010 in the account. (That’s the same amount of money it took you a full year to earn with simple interest.) For the next month you would earn interest on that new higher amount of money. As your savings continued to grow monthly, you would be earning interest on the new higher amounts.

With compound interest, your money may grow faster over time. And the sooner you begin saving with compound interest, the longer you could benefit.

Dive Deeper: Simple vs Compound Interest

Compound Interest Formula

There is a specific formula to determine compound interest. The formula is:

A = P(1 + rn)^n*t

Where:

• A represents the final amount of money you’ll get.

• P stands for the principal, or original amount deposited.

• r is the interest rate expressed as a decimal, such as 0.3 for 3% and 0.5 for 5%.

• n is the number of times the interest compounds each year.

• t is the number of years the interest will be compounding.

How often interest gets compounded (the “n” above) is instrumental. If the interest is compounded monthly instead of annually, for example, your savings may grow much faster. That’s because the more often your money compounds, generally, the more potential it has to grow.

Compound Interest Example Calculation

To calculate compound interest, you can use the compound interest formula above. The formula is typically used to calculate compound interest based on the principal (the amount of money you initially deposited), the interest rate, number of times the interest compounds per year, and the length of time the interest will be compounding.

To see how compound interest works, in the example below, $5,000 is deposited in a savings account in which the 5% interest is compounded monthly for 10 years. Here’s what that looks like:

Year	Account Balance	Interest Earned (5%)	New Balance
1	$5,000.00	$255.81	$5,255.81
2	$5,255.81	$268.90	$5,524.71
3	$5,524.71	$282.65	$5,807.36
4	$5,807.36	$297.12	$6,104.48
5	$6,104.48	$312.32	$6,416.79
6	$6,416.79	$328.30	$6,745.09
7	$6,745.09	$345.09	$7,090.18
8	$7,090.18	$362.75	$7,452.93
9	$7,452.93	$381.31	$7,834.23
10	$7,834.23	$400.81	$8,235.05

At the end of 10 years, your savings will be worth $8,235.05 — thanks to the $3,235.05 of compound interest you earned.

As you can see, the amounts could add up quickly. You can use a compound interest calculator to plug in different initial savings amounts, interest rates, and length of time the interest will be compounded.

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