Estimate your savings or spending through our compound interest calculator. Enter your initial amount, contributions, rate of return and years of growth to see how your balance increases over time.
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CJCompound interest means your money earns returns on both your original investment and your accumulated earnings. Your returns generate their own returns, turning small amounts into substantial wealth over time.
Our compound interest calculator shows exactly how your savings or debt will grow. Enter your starting amount, contributions and rate of return to see how different timeframes and compounding frequencies affect your balance. Test scenarios instantly with our free online tool.
Compound interest is the interest calculated on both the initial principal amount and the accumulated interest from previous periods. This means you earn "interest on interest," which accelerates the growth of your savings or debt over time.
Unlike simple interest, which calculates interest only on the original principal, compound interest adds the earned interest back to the principal balance. Each subsequent interest calculation uses this new, larger amount. This "snowball effect" creates exponential growth that becomes more powerful the longer your money remains invested.
The MoneyGeek Compound Interest Calculator is a free online tool that shows exactly how your savings or debt might grow using this formula. This concept powers long-term investments, retirement accounts and even the cash value in certain life insurance policies. Enter a few details to see how different timeframes, contribution patterns and interest rates affect your balance.
Compound interest calculates your investment or loan's future value including accumulated interest. The formula is:
To find compound interest earned (CI), subtract principal from future value:
Calculate ending balance with ongoing contributions using this expanded formula:
![A = P(1+r/n)^(nt)+c[((1+r/n)^(nt)-1)/(r/n)]](https://res.cloudinary.com/moneygeek/image/upload/v1603179399/MoneyGeek.com/media/CI_equation3_e34uyc.svg)
Where:
Our calculator uses these formulas automatically. If you select monthly contributions, the calculator applies monthly compounding even if the monthly contribution is zero. With annual contributions, annual compounding is applied.
You can calculate compound interest manually using the formula above, but the process becomes complex quickly. Manual calculations work for simple scenarios, but they're impractical when you need to account for regular contributions, different compounding frequencies or multiple time periods.
Here's what the math looks like for a basic scenario. Say you invest $1,000 at 5% annual interest compounded annually for three years:
Year 1: $1,000 × 1.05 = $1,050
Year 2: $1,050 × 1.05 = $1,103
Year 3: $1,103 × 1.05 = $1,158
Your investment grows to $1,158, earning $158 in compound interest.
Using the formula: A = 1,000(1 + 0.05/1)^(1×3) = $1,158
That manual calculation took three steps for just three years with no additional contributions. Add monthly deposits, switch to monthly compounding or extend to 10 or 20 years, and you'd need dozens of calculations. Our compound interest calculator handles all of this instantly.
Our calculator lets you:
Enter your starting amount, rate of return, timeframe and contributions at the top of this page. The calculator applies the compound interest formula automatically and shows you exactly how your money will grow.
Our calculator helps you estimate future interest on investments or debt without complex formulas. Just enter your numbers to get a clearer view of your financial future.
Start with your principal: the initial investment or loan. For example, enter $500 if you're investing that amount. Larger amounts benefit more from compounding, where returns generate additional earnings.
Choose how much you'll add to your investment or pay toward your debt, then select monthly or annual frequency. Monthly contributions compound sooner and more often, accelerating growth compared to annual contributions. Test different amounts to see the impact.
Input the annual interest rate you expect to earn or pay. For example, enter 8% for your investment return. Even a 1% to 2% change shifts your final balance. Test different rates to understand potential outcomes.
Enter how long your money stays invested or how long until you pay off debt. A five-year investment enters as "5." Longer periods exponentially increase returns, not just through simple addition. Try extending the period to see the difference.
Your balance grows year after year. The chart shows how compound interest accelerates slowly at first, then gains momentum as interest earns additional interest.
Your total balance breaks down by source: initial principal (purple), contributions (blue) and interest earned (green). See exactly what came from your deposits versus investment growth.
Year-by-year data shows your starting balance, annual contributions, cumulative contributions, interest earned, cumulative interest and total balance. Track how consistent savings build and compound interest grows each year.
Adjust contributions, rates or timeframes. Compare investing upfront versus contributing later, or higher-risk versus conservative options. Different approaches reveal what works best for your goals.
The calculator lets you compare scenarios, adjust variables and see the impact on your balance instantly. Visual outputs include bar charts showing year-by-year growth and pie charts breaking down balance by source.
Tables provide detailed annual breakdowns of contributions, interest earned and total balance. Choose monthly or annual contributions and compounding frequency. And results update in real time as you adjust your numbers.
The calculator runs the compound interest formula on your inputs. Enter principal, rate, time and contributions. It calculates interest for each period, adds that to your balance, then uses the new balance for the next calculation. This repeats across your entire timeframe.
For monthly compounding, the calculator divides your annual rate by 12 and compounds 12 times yearly. For annual compounding, it applies the full rate once per year. Charts and tables show exactly how your money grows period by period.
Compound interest works both ways: it builds wealth through investing or increases your debt burden through borrowing.
Compound interest grows wealth when you invest consistently over time. It works best for long-term savings like retirement accounts or education funds. Imagine a snowball rolling downhill: it collects more snow and grows larger with each turn. Your money compounds the same way. Early returns generate their own returns, building momentum until small contributions become substantial balances.
Compound interest becomes costly for borrowers. When you don't pay off your balance regularly, interest gets added to your loan balance and future interest calculations include this higher amount. The same exponential growth that benefits savers works against borrowers, making it critical to pay down balances quickly.
With simple interest, you earn interest only on your original principal. If you earn 10% annually on $100, you'll make $10 every year. After 20 years, you'd have $300: your $100 principal plus $200 in interest.
With compound interest, interest adds to your balance, and new interest calculations include previous earnings. In the second year, you'd earn interest on $110 instead of $100. Over 20 years, that same $100 grows to $673, showing compounding's power over time.
This calculation difference grows more significant as time passes. Compound interest can be your strongest ally or greatest challenge for saving or managing debt.
Imagine investing $500 at an 8% annual return with monthly compounding. Here's what your interest earnings could look like over five years without adding new money:
Your interest earnings grow each year because your larger balance generates more interest. That's compounding at work. The longer your money stays invested, the more dramatic the growth.
Permanent life insurance policies with cash value components also use compound interest, though the mechanics differ from traditional investments. With whole life insurance, for example, your cash value might grow at 3% to 5% annually with guaranteed returns.
If you pay $3,000 in annual premiums with $2,000 going toward cash value:
The growth is usually more conservative than market-based investments, but it comes with guarantees and tax advantages. Your cash value compounds without market volatility, and you can access it through loans or withdrawals.
Starting early and staying consistent offer major advantages. Given enough time, even small amounts can snowball into meaningful savings.
Permanent life insurance policies use compound interest to build cash value over time. Understanding how this works helps you evaluate whether these products fit your financial strategy.
Whole life and universal life policies bundle a cash value component with your death benefit. Your premiums pay for coverage and cash accumulation. Cash value grows at policy-specified rates, typically 2% to 5% for whole life.
Universal life policies tie returns to market indexes, earning higher returns with less certainty. Cash value grows tax-deferred, letting you borrow against it or withdraw funds during your lifetime.
Life insurance cash value provides guarantees that traditional investments don't offer. Your principal is usually protected, and minimum growth rates are contractually specified. However, returns are generally lower than long-term stock market averages.
These policies bundle insurance with cash value, affecting costs and returns. Choose life insurance when you want principal protection and guaranteed growth over higher returns. Both offer tax-deferred growth in qualified accounts. Compare permanent life insurance to stocks and bonds based on whether you prioritize protection or growth.
About Nathan Paulus
Nathan Paulus is the Head of Content at MoneyGeek, where he conducts original data analysis and oversees editorial strategy for insurance and personal finance coverage. He has published hundreds of data-driven studies analyzing insurance markets, consumer costs and coverage trends over the past decade. His research combines statistical analysis with accessible financial guidance for millions of readers annually.
Paulus earned his B.A. in English from the University of St. Thomas, Houston.
