Compound Interest Calculator
Use my popular calculators to work out the compound interest on your savings, with monthly interest breakdowns and the option to include regular monthly deposits or withdrawals (for retirement calculations, etc). Use the second calculator to work out interest on a simple lump sum savings amount. In our article archive, you can learn about compound interest or find out all about the formula for compound interest.
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Whilst every effort has been made in building these compound interest calculators, I am not to be held liable for any special, incidental, indirect or consequential damages or monetary losses of any kind arising out of or in connection with the use of the calculator tools and information derived from the web site. These tools are here purely as a service to you, please use them at your own risk.
The calculations given by the compound interest calculators are only a guide. Please speak to an independent financial advisor for professional guidance. Read the full disclaimer.
Compound interest calculator - FAQ
What is compound interest?
Compound interest is the concept of adding accumulated interest back to the principal sum, so that interest is earned on top of interest from that moment on. The act of declaring interest to be principal is called compounding.
Financials institutions vary in terms of their compounding rates - daily, monthly, yearly, etc. As an example, a savings account with $1000 principal and 10% interest per month would have a balance of $1100 at the end of the first month. By the end of the second month, the $1100 amount would have received 10% more, making $1210... and so on...
You can learn more about compound interest in this article. If you want to work out how long it will take you to achieve a savings goal with regular monthly payments, see the article how long will it take me to save?. Finally, if you want to work out what interest rate you are getting on an existing loan/mortgage, try the interest rate calculator.
Daily, monthly or yearly compounding calculations
Our compound interest calculators allow you to compound interest on either a daily, monthly, quarterly, half yearly or yearly basis. Your savings account may vary on this, so you may wish to check with your bank or financial institution to find out which frequency they compound the interest on your savings.
So what difference does the frequency of compounding make to your savings calculation? The line graph below demonstrates the compounding effect of varying frequencies on an initial investment of $1000 with a 20% annual interest rate.
Graph created by Jelson25.
When is interest compounded?
With savings accounts, interest can be calculated at either the start or the end of the compounding period (month or year). With my calculator, above, additions are made at the start of each compounding period.
What is the effective annual rate?
The effective annual rate is the rate that actually gets paid after all of the compounding. When compounding of interest takes place, the effective annual rate becomes higher than the overall interest rate. The more times the interest is compounded within the year, the higher the effective annual rate will be.
What is the formula for compound interest?
Annual Compound Interest Formula:
V = P(1+r/n)^nt
The popular formula for calculating annual compound interest is V = P(1+r/n)^nt
V = the future value of the investment
P = the principal investment amount
r = the annual interest rate
n = the number of times that interest is compounded per year
t = the number of years the money is invested for
You can learn more about the compound interest formula, and try out an interactive formula calculation tool, in our article dedicated to the formula for compound interest
If you have any problems using the compound interest calculator tools, please contact me.