Compound Interest Calculator
See how a lump sum grows when interest earns its own interest — with the formula shown.
How compound interest is calculated
The balance is found with the compound interest formula:
A = P × (1 + r ÷ n)^(n × t)
where P is the starting amount, r is the annual rate as a decimal, n is how many times a year interest is added, and t is the number of years. Interest earned is the final balance minus what you started with.
The magic is that interest is added back to the balance, so future interest is calculated on a bigger number each period. Over long horizons this snowball effect dominates.
FAQ
What is compound interest?
It's interest calculated on your original amount plus the interest already earned. That's why savings and debts both grow faster under compounding than under simple interest.
Does compounding frequency really matter?
A little. Compounding monthly or daily earns slightly more than yearly at the same rate, because interest starts earning its own interest sooner.
Does this include regular deposits?
No — this models a single lump sum. Regular monthly contributions grow even faster, but they need a separate formula.