Compound Interest Calculator
Use this calculator to easily calculate the compound interest and total deposit future value based on an initial principal. Allows adding money into the deposit, as well as calculating daily, monthly, quarterly, semiannual, and annual interest compounding, corresponding to compounding once per day, month, quarter, 6-months and 12-months (once per year).
Using the compound interest calculator
Compound interest is a type of interest in which the interest amount is periodically added to the principal amount, and new interest is subsequently accrued over interest from past periods. It is a very powerful tool for increasing your capital and is a basic calculation related to personal savings plan or strategy, as well as long term growth of a stock portfolio.
Our compound interest calculator is a versatile tool which will help you:
- calculate the final amount of money you will be able to save
- calculate how compounding increases your savings over time
- understand the difference between starting to save now or later
Start by entering your initial deposit or investment, or your current balance if you already have a deposit. This is used as a basis for all calculations. Then enter how long you want to keep the deposit or investment, usually in years, but we also support other time periods.
Enter the annual interest rate: this is usually listed as APR on offers and on bank product comparison sites and does not take compounding into account. This is different than the Annual Percentage Yield (APY) a.k.a. Effective Annual Interest Rate which our calculator will calculate for you, as it depends on the compounding period. Both the APR and APY do not account for fees and other expenses in servicing the deposit or investment.
Continue by specifying the compounding period - you may need to consult your bank on this detail, but it is often disclosed on offers and deposit descriptions. Finally, if you plan on making regular contributions: adding to the deposit on a regular basis (monthly, yearly, etc.), enter the amount and the period on which you will make it, as well as whether you will make it in the beginning or the end of the period.
The interest calculator will output: the value of your deposit or investment at the end of the period, the interest accrued, the effective interest rate, the total amount of additional deposits made and the percentage capital growth.
Compound interest formula
The compound interest formula is:
where A is the Accrued amount (principal plus interest), P is the principal, r is the Annual interest rate (not compounded, not APY) in decimal, t is the time in years, and n is the number of compounding periods per unit t.
The formula for the effective interest rate is:
where I is the effective interest rate and the rest of the notation is as above. These formulas can be spun accordingly to solve for principal and time. If you wonder how to calculate compound interest, these formulas provide the answer.
Effect of the compounding period
The compounding frequency, which is the time period at which interest is added to the principal, can have a slight positive effect on the effective interest rate versus the nominal annual interest rate. Using shorter compounding periods in our compound interest calculator will easily show you how big that effect is. You get the best effective rate when you have daily compounding (also called continuous compounding) and slightly worse with monthly or yearly compounding.
This is a simple online tool which is a good starting point in estimating the return on investment and capital growth you can expect from a bank deposit or a similar investment, but is by no means the end of such a process. You should always consult a qualified professional when making important financial decisions and long-term agreements, such as long-term bank deposits. Use the information provided by the software critically and at your own risk.
Cite this calculator & page
If you'd like to cite this online calculator resource and information as provided on the page, you can use the following citation:
Georgiev G.Z., "Compound Interest Calculator", [online] Available at: https://www.gigacalculator.com/calculators/compound-interest-calculator.php URL [Accessed Date: 29 May, 2020].