Compound Interest Calculator
See how a starting balance and regular contributions grow over time with compound interest.
How compound interest works
Compound interest is what happens when the interest your money earns starts earning interest of its own. A deposit sitting in an account at 5% doesn't just grow by a flat amount every year — each year's growth is calculated on a slightly larger balance than the year before, which is why long time horizons matter so much more than most people expect.
This calculator runs the math month by month: your starting deposit and monthly contribution both earn interest, and that interest is added back to the balance before the next month's growth is calculated. The chart above shows the balance at the end of each year, so you can see how the curve bends upward as the account matures — the classic "hockey stick" shape of long-term compounding.
Why the interest rate matters more over time
A 2-point difference in annual return looks small on paper but compounds into a large gap over 20-30 years, because every extra percentage point of growth is itself compounding. This is also why starting early beats contributing more later — money that's been compounding for 20 years has had far more cycles of growth than the same amount deposited 10 years ago, even if the later deposit is larger.
Use this tool to compare scenarios: try increasing the monthly contribution versus increasing the interest rate, or adding five extra years, and watch how each lever moves the final balance. If you're working toward a specific number rather than just watching a balance grow, the Savings Goal Calculator flips this math around to tell you exactly how much to contribute each month.
Frequently asked questions
Is this daily, monthly, or annual compounding?
This calculator compounds monthly — interest is calculated and added to your balance every month, which is how most savings accounts and investment accounts actually work. Monthly compounding produces slightly higher growth than annual compounding at the same stated rate.
Does the monthly contribution earn interest in the same month it's added?
No — contributions are added at the end of each month, after that month's interest has already been applied to the existing balance. This is the standard "ordinary annuity" convention used by most compound interest calculators.
What return rate should I use?
For a savings account, use the account's stated annual percentage yield. For long-term investments like index funds, many planners use a conservative long-run average (often 5-7% after inflation) rather than a single good year's return — markets are volatile year to year.
How is this different from the Savings Goal calculator?
This tool projects forward from what you contribute. If instead you know the amount you need and want to know how much to save each month, use the Savings Goal Calculator. For a retirement-specific version with a withdrawal estimate, see the Retirement Savings Calculator.