Compound Interest Calculator
Calculate how your savings grow with compound interest over time.
| Year | Balance | Interest earned | This year |
|---|---|---|---|
| Year 1 | $10,722.90 | $722.90 | $722.90 |
| Year 2 | $11,498.06 | $1,498.06 | $775.16 |
| Year 3 | $12,329.26 | $2,329.26 | $831.20 |
| Year 4 | $13,220.54 | $3,220.54 | $891.28 |
| Year 5 | $14,176.25 | $4,176.25 | $955.71 |
| Year 6 | $15,201.06 | $5,201.06 | $1,024.80 |
| Year 7 | $16,299.94 | $6,299.94 | $1,098.89 |
| Year 8 | $17,478.26 | $7,478.26 | $1,178.32 |
| Year 9 | $18,741.77 | $8,741.77 | $1,263.51 |
| Year 10 | $20,096.61 | $10,096.61 | $1,354.84 |
Frequently Asked Questions
What is compound interest and how does it work?
Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. Unlike simple interest (which only earns on the original amount), compound interest grows exponentially — your interest earns interest. A $10,000 investment at 7% compounded annually becomes $19,671 after 10 years vs $17,000 with simple interest.
How often should interest compound for the best returns?
The more frequently interest compounds, the more you earn. Daily compounding yields slightly more than monthly, which yields more than annual. $10,000 at 6% for 20 years grows to $33,102 with annual compounding vs $33,200 with daily compounding. Most savings accounts use daily or monthly compounding.
What is the Rule of 72 for doubling your money?
The Rule of 72 is a quick mental shortcut: divide 72 by your annual interest rate to estimate how long it takes to double your money. At 6% your money doubles in ~12 years; at 8% in ~9 years; at 12% in just 6 years. It also works for debt — a 24% credit card doubles your balance in 3 years if unpaid.
Does this calculator account for inflation?
No — this calculator shows nominal (before-inflation) returns. To find your real purchasing-power gain, subtract the inflation rate from your interest rate before entering it. For example, at 7% nominal return with 3% inflation, use 4% to see inflation-adjusted growth.
How much do monthly contributions affect compound growth?
Regular contributions dramatically accelerate wealth building. Adding just $200/month to a $10,000 starting balance at 7% annual return turns into over $260,000 after 25 years — far more than the $54,274 without contributions. Starting early matters most: small consistent amounts compounded over decades create significant wealth.