What is compound interest?

It is interest calculated on both the original principal and the interest already added, so the balance grows faster over time than with simple interest.

Does compounding frequency matter?

Yes. For the same annual rate, more frequent compounding produces slightly more interest because interest is added to the balance sooner.

How is this different from simple interest?

Simple interest is charged only on the original principal, while compound interest is charged on the growing balance.

Finance Calculators

Compound Interest Calculator

Calculate future value and total compound interest with flexible compounding.

Free browser toolRuns in your browserNo sign-up

PrincipalCurrencyAnnual interest rate (%)Compounding frequency

TimeUnit

Future value

$14,898.46

$4,898.46

Total interest

$14,898.46

Future value

Future value composition

Principal $10,000.00Interest $4,898.46

Compound interest uses A = P(1 + r/n)^(nt), where n is the number of compounding periods per year. More frequent compounding produces slightly more interest for the same rate.

Compound interest formula explained

Compounding adds earned interest to the balance, allowing later interest to grow on both the principal and earlier interest.

A = P x (1 + r / n)^(n x t)

A: Future value
P: Starting principal
r, n, t: Annual decimal rate, periods per year and years

Worked example

$1,000 at 5% compounded annually for 2 years grows to $1,102.50, including $102.50 interest.

Practical tips

Compare effective yield
More frequent compounding raises the effective return slightly at the same nominal rate.
Allow for taxes and fees
The displayed growth is before any account charges, taxes or withdrawals.

About the Compound Interest Calculator

The Compound Interest Calculator finds how much a principal grows when interest is added back to the balance and itself earns interest over time.

It uses A = P(1 + r/n)^(nt), where n is the number of compounding periods per year. You can compound annually, semi-annually, quarterly, monthly or daily.

Alongside the future value it shows the total interest earned. More frequent compounding produces a slightly larger balance for the same annual rate, and all maths runs in your browser.

Key features

Future value and total interest
Annual to daily compounding
Time in years or months
Locale-aware currency formatting

How to use

1Enter the principal and choose a currency.
2Enter the annual interest rate.
3Choose the compounding frequency.
4Enter the time and read the future value and interest.

Examples

Annual compounding

Input: USD 1,000 at 5% for 2 years

Output: USD 1,102.50 future value; USD 102.50 interest

After year one the balance is USD 1,050, and the second year's interest is calculated on that larger balance.

Frequently asked questions

What is compound interest?: It is interest calculated on both the original principal and the interest already added, so the balance grows faster over time than with simple interest.
Does compounding frequency matter?: Yes. For the same annual rate, more frequent compounding produces slightly more interest because interest is added to the balance sooner.
How is this different from simple interest?: Simple interest is charged only on the original principal, while compound interest is charged on the growing balance.

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