Estimate how money can grow when interest is added to the balance over time.
A is the final amount, P is principal, r is annual rate as a decimal, n is compounding frequency, and t is years.
How to Calculate Compound Interest Monthly →
Compound interest means previously earned interest becomes part of the balance used to calculate later interest. The frequency of compounding therefore affects the final amount when the nominal rate and time period stay the same.
If 1,000 earns 5% annually for three years with annual compounding, the balance is 1,000 × (1.05)^3, or about 1,157.63. Monthly compounding uses a different periodic rate and a larger number of compounding periods.
Simple interest calculates interest on the original principal only. Compound interest repeatedly applies interest to the growing balance. For a clear comparison, keep the principal, annual rate, and time period the same and change only the interest method.
Savings accounts and investments can have deposits, withdrawals, changing rates, taxes, and fees. This calculator models the mathematical formula you enter and should be treated as an estimate when the real account has additional rules.
Compound interest is interest calculated on a balance that can include previously earned interest. The effect becomes more noticeable as time and the compounding frequency increase.
When the nominal rate and other assumptions stay the same, more frequent compounding can increase the ending balance. The exact result depends on the rate, time, and compounding schedule.
You typically need the starting principal, annual interest rate, time period, and compounding frequency. Additional contributions or withdrawals require a different calculation.