Calculate compound interest with any compounding frequency — daily, monthly, quarterly or annually. See year-by-year growth, total interest earned, principal vs interest breakdown, and compare compounding frequencies side by side.
Enter your starting principal amount, the annual interest rate, the compounding frequency (daily, monthly, quarterly or annually), and the investment period in years. You can also add regular monthly contributions.
The year-by-year table shows how your balance grows over the full investment period — including the interest earned each year and the cumulative total. The principal vs interest split shows how much of your final balance was your original money versus earned interest.
The frequency comparison section shows what your final balance would be under each compounding frequency, illustrating how much more daily compounding earns versus annual compounding on the same principal and rate.
Compound interest is interest calculated on both the initial principal and the interest already accumulated. Unlike simple interest (which only earns on the original principal), compound interest means your interest earns interest — creating exponential rather than linear growth. Albert Einstein reportedly called compound interest the eighth wonder of the world.
The formula is A = P(1 + r/n)^(nt), where A is the final amount, P is the principal, r is the annual interest rate (as a decimal), n is the number of times interest compounds per year, and t is the time in years. For continuous compounding the formula is A = Pe^(rt).
APR (Annual Percentage Rate) is the stated interest rate before compounding effects. APY (Annual Percentage Yield) is the effective rate after compounding — it reflects how much you actually earn in a year. Daily compounding at 5% APR produces an APY of approximately 5.13%. Always compare APY when choosing savings accounts or investments.
Compounding frequency has a meaningful but not enormous effect. On $10,000 at 5% for 10 years: annual compounding gives $16,289; daily compounding gives $16,487 — a difference of $198. The frequency effect becomes more significant at higher rates or longer time periods. The biggest factor in compound interest is always time — the longer the period, the more dramatic the exponential effect.
The Rule of 72 is a quick mental shortcut for estimating how long it takes to double an investment with compound interest. Divide 72 by the annual interest rate to get the approximate number of years to double. At 6% annual rate: 72/6 = 12 years to double. At 9%: 72/9 = 8 years. This works well for rates between 6% and 10%.
Simple interest is calculated only on the principal: SI = P × r × t. Compound interest is calculated on the principal plus accumulated interest. For a $10,000 investment at 5% over 10 years: simple interest gives $15,000 (exactly $5,000 interest); compound interest annually gives $16,289 (nearly $6,289 interest). The longer the period, the greater the gap between them.
