Compound Interest Calculator
Calculate compound interest and the future value of an investment based on the principal, annual rate, time, and compounding frequency.
The initial amount of money.
Annual interest rate (e.g. 5 for 5%).
Enter as decimal for partial years (e.g. 1.5).
A = P(1 + r/n)nt
Frequently Asked Questions
What is the difference between simple interest and compound interest?
Simple interest is calculated on the original principal only. Compound interest is calculated on the principal plus any interest that has already been added — meaning you earn interest on your interest, which accelerates growth over time.
How does compounding frequency affect returns?
The more frequently interest is compounded, the higher your effective annual yield. For example, monthly compounding produces slightly more growth than annual compounding because interest begins earning its own interest sooner.
Can I use this for stocks, bonds, and savings accounts?
Yes. This calculator works for any investment or loan that uses compound interest — including high-yield savings accounts, CDs, bonds, and dividend reinvestment accounts. Just enter the annual rate and time horizon.
What is the effective annual rate (EAR)?
The effective annual rate is the actual return or cost of money when compounding is taken into account. It is always higher than the stated annual rate when compounding occurs more than once per year. For example, 5% compounded monthly has an EAR of about 5.12%.