How do I calculate compound interest?
- 1Enter your starting amount and, if you add money regularly, your monthly deposit.
- 2Enter the yearly interest rate and the number of years.
- 3Choose how often interest is compounded and whether you deposit at the start or end of each month.
- 4Read the final balance, the interest earned and the year-by-year table.
What is the compound interest formula?
- 01Starting sum only: A = P × (1 + r/k)^(k × t)
- 02r = yearly rate ÷ 100 · k = compounding periods a year · t = years
- 03Monthly deposits C (monthly compounding, i = r/12, n = 12t): C × ((1 + i)ⁿ − 1) ÷ i
- 04Deposits at the start of the month: multiply the deposit part by (1 + i)
- 05Other compounding: i = (1 + r/k)^(k/12) − 1, the monthly rate that grows money the same way
- 06Effective annual rate (APY) = (1 + r/k)^k − 1
Compound interest is interest on interest: each time interest is added, the next period's interest is worked out on a bigger balance. 10,000 at 5% grows to 16,288.95 in 10 years with yearly compounding, and to 16,470.09 with monthly compounding.
Regular deposits grow the same way. Each month's deposit earns interest for the months left, which adds up to the annuity formula C × ((1 + i)ⁿ − 1) ÷ i. Depositing at the start of each month gives every deposit one more month of growth.
The effective annual rate (also called APY or AER) shows what a rate really earns in a year once compounding is counted: 5% compounded monthly is 5.116% a year, and compounded daily it is 5.127%. Use it to compare accounts that compound differently.
How much will 10,000 grow to in 10 years?
Starting with 10,000 and adding 200 a month at 7% a year, compounded monthly, for 10 years:
you put in 34,000 and end with 54,713.58 — 20,713.58 of it is interest.
Good to know
- Time matters more than anything: starting ten years earlier can do more than doubling the deposit.
- Compare accounts by their effective annual rate (APY / AER), not the headline rate.
- The rule of 72: divide 72 by the yearly rate to estimate how many years money takes to double — about 10 years at 7%.
- Add inflation to see what the final sum is worth in today's money.
Compound interest questions
How is compound interest calculated?
A = P × (1 + r/k)^(k×t), where P is the starting amount, r the yearly rate, k how many times a year interest is added and t the years. Regular deposits are added with the annuity formula. This calculator works month by month, so both are combined exactly.
How much is 10,000 at 7% for 10 years?
With yearly compounding it grows to 19,671.51. Monthly compounding gives a little more, 20,096.61, because interest is added twelve times a year.
Does daily or monthly compounding make a big difference?
Less than most people think. At 5%, monthly compounding earns an effective 5.116% a year and daily 5.127%. The rate itself and the time you stay invested matter far more.
How much will 500 a month grow to in 30 years?
At 7% a year compounded monthly, about 609,985 — from 180,000 of deposits. The rest, about 430,000, is compound interest. Real returns vary year to year.
What is the difference between APR and APY?
APR is the yearly rate without compounding; APY (AER in the UK) includes compounding, so it shows what you really earn in a year. This calculator shows the APY for your rate and compounding as the effective annual rate.
Sources
- U.S. SEC Investor.gov – Compound interest calculator
- Standard compound interest and future-value-of-annuity formulas
Formulas last reviewed: September 30, 2026 ·How we check our formulas