Compound Interest Calculator
Compound interest at any frequency, including continuous, with optional monthly additions and the effective annual rate. The only figure that lets you compare two different compounding frequencies honestly.
Also called: ci calculator, compounding calculator, interest on interest.
$27,070.41 after 10 years. You put in $10,000.00; compounding added $17,070.41. The effective annual rate is 10.47%.
An estimate, not an offer or a guarantee. Projected returns assume the rate you entered holds for the whole term, which no market does.
This is what the calculation gives for the numbers you entered. It is an estimate, not advice, and it knows nothing about your situation beyond those numbers. Rules for United States change on a published schedule; the effective date is shown on every rule-based tool.
How this is calculated
Each period multiplies the balance by one plus the periodic rate, applied m×t times. As the frequency rises the result approaches Pe^rt, which is what continuous compounding means. The effective annual rate collapses any frequency to one comparable number: 10% compounded monthly is an EAR of 10.47%, which beats 10.4% compounded annually.
A = P * (1 + r/m)^(m*t)- P
- Principal (currency)
- r
- Nominal annual rate (decimal)
- m
- Compounding periods per year
- t
- Years (years)
Method and limits
What it assumes
- The return you enter is assumed to hold, unchanged, for the whole period. No market does this.
- Returns are compounded at the stated frequency with no taxes, fees or exit loads deducted.
Formula version 1.0.0 · definition 1.0.0 · United States · Report a problem with this calculator
Frequently asked questions
- What is the difference between compound and simple interest?
- Simple interest is charged on the original amount only; compound interest is charged on the balance, which includes interest already added. Over one period they are identical. Over thirty years at 8% compounding turns 100 into 1,006 while simple interest reaches 340.
- Does compounding frequency matter much?
- Less than people expect, and it never runs away. 12% compounded annually gives 12%, monthly gives 12.68%, daily 12.75%, and continuously 12.75% as the ceiling. The rate matters far more than the frequency.