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.
The compound interest formula calculates the future value of an investment or loan, including all accumulated interest over time. The most common formula is:
To find just the compound interest earned (CI), subtract the principal from the future value:
To calculate the ending balance with ongoing contributions, use 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 amount: the initial investment or debt. For example, if you're investing $500, enter that number.
Your starting amount is the foundation for compound growth. Larger amounts benefit more from the "snowball effect," where returns generate additional earnings and impact your long-term balance.
Enter how much you'll add to your investment or pay toward your debt, and select monthly or annual frequency.
For $20 yearly investments, enter that amount and choose "Annually." For $20 monthly debt payments, select "Monthly."
Monthly contributions give you an advantage because your money starts compounding sooner and more often, accelerating growth compared to annual contributions. Try different amounts or frequencies to see the impact on your ending balance.
Enter the average monthly compound interest rate you expect to earn or pay. For example, enter 8% for your expected investment return.
The rate impacts your results. Even a 1% to 2% difference can change your final balance over time. Since investment returns vary, test different scenarios to understand potential outcomes.
Enter how long you'll keep your money invested or how long you'll take to pay off debt. For a five-year investment, enter "5."
Time is important in compound interest. Longer timeframes often more than double your returns due to exponential growth, not simple addition. Try extending the period to see how much larger your balance could become.
The bar chart shows how your balance grows year after year.
Notice how compound interest accelerates over time, starting slowly but gaining momentum in later years as your interest earns additional interest.
The pie chart divides your total balance by source: initial principal (purple), total contributions (blue) and interest earned through compounding (green).
This visual breakdown shows what portion of your final balance came from your deposits versus what was generated by investment growth over time.
The compound interest table provides a year-by-year breakdown of your starting balance, annual contributions, cumulative contributions, interest earned, cumulative interest and total balance.
This detailed view shows how consistent savings or debt payments build up and how compound interest contributes more each year.
Adjust variables to experiment with different scenarios. Try changing your contributions, rates of return or timeframes. Compare investing more upfront versus making larger contributions later, or higher-risk investments versus conservative options.
Experimenting helps you find the most effective approach for your financial goals.
Our compound interest calculator offers multiple functionalities to help you plan effectively:
The calculator applies the compound interest formula to your inputs automatically. When you enter your principal, rate, time and contributions, it calculates interest for each compounding period, adds that interest to your balance, then uses the new balance for the next calculation. This process repeats for every period across your entire timeframe.
For monthly compounding, the calculator divides your annual rate by 12 and compounds 12 times per year. For annual compounding, it applies the full rate once yearly. The visual outputs translate these mathematical calculations into easy-to-understand charts and tables, showing exactly how your money grows period by period.
Compound interest works both ways. It can help you build wealth or increase your debt burden.
Compound interest helps investors grow wealth steadily, especially with consistency and patience. It's ideal for long-term savings like retirement accounts or education funds. Think of a snowball rolling downhill. As it rolls, it collects more snow, growing larger. The bigger snowball then gathers even more snow with each turn. Similarly, compound interest builds momentum: small early returns become larger gains later as your interest earns its own interest.
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 insurance policies include a cash value component that grows alongside your death benefit protection. Your premiums pay for both coverage and cash accumulation. The cash value compounds at rates specified in your policy, usually 2% to 5% for whole life insurance.
Universal life policies may offer variable returns tied to market indexes, potentially earning higher returns but with less predictability. The cash value grows tax-deferred, and you can 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 include insurance components like death benefits, which affect overall costs and returns. Consider your need for guarantees versus growth potential when comparing permanent life insurance to traditional investments. The tax-deferred growth and principal protection appeal to conservative savers, while the lower returns may not suit those seeking maximum wealth accumulation.
About Nathan Paulus
Nathan Paulus is the Head of Content at MoneyGeek, with over a decade of experience researching and creating content in insurance and personal finance.
Paulus has a bachelor's degree in English from the University of St. Thomas, Houston. He enjoys helping people from all walks of life build stronger financial foundations.
