Compound Interest Calculator
Enter the amount, rate, how often it compounds and for how long. Get the balance and a year-by-year table.
How it works
The formula is A = P(1 + r/n)ⁿᵗ, with the rate r as a decimal. The result also shows simple interest, so you can see what compounding adds.
Example
Find the balance on $2,500 at 4% compounded monthly for 5 years.
$3,052.49
- Interest earned
- $552.49
- With simple interest
- $3,000.00
Steps
- Formula: A = P(1 + r/n)nt, with r as a decimal: r = 0.04.
- Compounded 12 times a year for 5 years is 60 periods at 0.003333 each.
- A = 2500 × (1 + 0.003333)60 = $3,052.49.
| Year | Balance | Interest so far |
|---|---|---|
| 1 | $2,601.85 | $101.85 |
| 2 | $2,707.86 | $207.86 |
| 3 | $2,818.18 | $318.18 |
| 4 | $2,933.00 | $433.00 |
| 5 | $3,052.49 | $552.49 |
More examples
Find the balance on $1,000 at 6% compounded yearly for 10 years.
$1,790.85
- Interest earned
- $790.85
- With simple interest
- $1,600.00
Steps
- Formula: A = P(1 + r/n)nt, with r as a decimal: r = 0.06.
- Compounded 1 time a year for 10 years is 10 periods at 0.06 each.
- A = 1000 × (1 + 0.06)10 = $1,790.85.
| Year | Balance | Interest so far |
|---|---|---|
| 1 | $1,060.00 | $60.00 |
| 2 | $1,123.60 | $123.60 |
| 3 | $1,191.02 | $191.02 |
| 4 | $1,262.48 | $262.48 |
| 5 | $1,338.23 | $338.23 |
| 6 | $1,418.52 | $418.52 |
| 7 | $1,503.63 | $503.63 |
| 8 | $1,593.85 | $593.85 |
| 9 | $1,689.48 | $689.48 |
| 10 | $1,790.85 | $790.85 |
Find the balance on $1,000 at 6% compounded monthly for 10 years.
$1,819.40
- Interest earned
- $819.40
- With simple interest
- $1,600.00
Steps
- Formula: A = P(1 + r/n)nt, with r as a decimal: r = 0.06.
- Compounded 12 times a year for 10 years is 120 periods at 0.005 each.
- A = 1000 × (1 + 0.005)120 = $1,819.40.
| Year | Balance | Interest so far |
|---|---|---|
| 1 | $1,061.68 | $61.68 |
| 2 | $1,127.16 | $127.16 |
| 3 | $1,196.68 | $196.68 |
| 4 | $1,270.49 | $270.49 |
| 5 | $1,348.85 | $348.85 |
| 6 | $1,432.04 | $432.04 |
| 7 | $1,520.37 | $520.37 |
| 8 | $1,614.14 | $614.14 |
| 9 | $1,713.70 | $713.70 |
| 10 | $1,819.40 | $819.40 |
Common mistake
Change the percent to a decimal first: 4% is 0.04. Then divide by the number of compounding periods per year.
Questions
What is the rule of 72?
Divide 72 by the yearly rate to estimate how many years it takes to double. At 6%, about 12 years.
Does compounding more often matter much?
A little. $1,000 at 6% for 10 years grows to $1,790.85 compounded yearly and $1,819.40 compounded monthly.
What is APY?
The yearly rate after compounding. 6% compounded monthly is an APY of about 6.17%.