Compound Interest Calculator
Compound interest is interest earned on both the initial principal and previously accumulated interest. It is the most powerful force in finance.
Last updated: August 2026 · Written and verified by Akash Pandey
Calculate compound interest
Future value ($)
This runs the same calculation engine as the main scientific calculator, entirely in your browser. Nothing you type is sent anywhere.
What is compound interest?
Compound interest is interest calculated on the initial principal and all previously accumulated interest. Unlike simple interest, which only earns on the original amount, compound interest grows exponentially.
A = P(1 + r/n)^(nt)
- A = future value
- P = principal (initial investment)
- r = annual interest rate (as a decimal)
- n = number of times interest compounds per year
- t = number of years
Worked example
$10,000 at 7% compounded monthly for 10 years
10000 × (1 + 0.07/12)^(12×10)
- Monthly rate:
0.07 ÷ 12 = 0.005833. - Total periods:
12 × 10 = 120. - Growth factor:
(1.005833)^120 ≈ 2.0097. - Future value:
10000 × 2.0097 ≈ $20,097. - Total interest earned:
$20,097 − $10,000 = $10,097.
= $20,097
- Monthly rate:
Compounding frequency
| Frequency | Periods/year | Effective rate (at 7%) |
|---|---|---|
| Annual | 1 | 7.000% |
| Semi-annual | 2 | 7.122% |
| Quarterly | 4 | 7.186% |
| Monthly | 12 | 7.229% |
| Daily | 365 | 7.250% |
| Continuous | ∞ | 7.251% |
More frequent compounding produces higher returns, but the difference becomes marginal above monthly compounding.
Frequently Asked Questions
How often is interest compounded?
Common compounding frequencies are annual (1x), semi-annual (2x), quarterly (4x), monthly (12x), and daily (365x). More frequent compounding results in slightly higher returns.
What is the rule of 72?
The rule of 72 estimates how long it takes for an investment to double: divide 72 by the interest rate. At 7%, it takes about 72/7 ≈ 10.3 years to double.
Is compound interest always better than simple interest?
For investments, yes - compound interest grows faster. For loans, compound interest means you pay more over time, so simple interest loans are cheaper.
What is the effective annual rate (EAR)?
The EAR accounts for compounding within the year. If a nominal rate is 7% compounded monthly, the EAR is (1 + 0.07/12)^12 − 1 ≈ 7.23%. It reflects the true annual cost or return.
How does monthly compounding differ from annual?
Monthly compounding applies interest 12 times per year instead of once. This results in slightly higher returns because each month's interest earns interest in subsequent months.
What is continuous compounding?
Continuous compounding applies interest at every instant. The formula is A = Pe^(rt), where e ≈ 2.71828. It produces the maximum possible growth for a given rate.
How long does it take to double my money?
Use the Rule of 72: divide 72 by the interest rate. At 6%, it takes about 12 years. At 8%, about 9 years. The exact formula is ln(2)/ln(1+r).
Can compound interest work against me?
Yes. Credit cards and loans with compound interest mean you owe interest on previously charged interest. This is why high-interest debt can grow quickly if unpaid.