How to use the compound interest calculator
- Enter your starting principal — the amount you deposit or invest today.
- Enter the annual interest rate as a percentage.
- Enter the number of years you plan to leave the money invested.
- Choose a compounding frequency from the dropdown, then press "Calculate".
What compound interest means
With compound interest, the interest you earn is added back to your balance, so the next period's interest is calculated on a larger amount. Over time this snowball effect is what turns modest savings into substantial balances. The formula is A = P × (1 + r/n)^(n × t), where P is the principal, r is the annual rate as a decimal, n is the number of compounding periods per year, and t is the time in years. The interest earned is simply A minus P.
Because interest is paid on interest, a higher rate or a longer term has an outsized effect. The same $10,000 at 6% grows far more over 30 years than over 10 — not linearly, but by an accelerating curve.
How compounding frequency changes the result
| Frequency | Periods per year | Effect on growth |
|---|---|---|
| Annually | 1 | Interest added once a year — slowest growth. |
| Semi-annually | 2 | Interest added twice a year. |
| Quarterly | 4 | Interest added every three months. |
| Monthly | 12 | Interest added every month — a common savings-account setup. |
| Daily | 365 | Interest added daily — the fastest growth for a given rate. |
Why frequency matters
More frequent compounding means interest is reinvested sooner, so it earns its own interest earlier. The difference between annual and daily compounding is small at low rates but grows more meaningful as the rate and term increase. Comparing the five options side by side is a quick way to understand exactly how much a bank's compounding policy is worth to you.