Compound Interest Calculator

Compound Interest Calculator

Interest can be charged two ways. With simple interest, you only ever pay (or earn) interest on the amount you started with. With compound interest, the interest is added to the balance and then earns interest of its own, so the balance grows on itself. This calculator draws both side by side and lets you change how often the interest compounds. For the full story, read simple vs compounding interest.

How compound interest works

Compound interest is the same mechanism whether it is working for you or against you. On savings it is the reason money left alone grows faster and faster over time. On debt it is what makes a balance you do not pay down expensive, because you start paying interest on top of interest you already owe. Which side you are on is the only thing that changes. Most personal loans, auto loans and mortgages use simple interest on the outstanding balance, while credit cards and savings accounts compound.

Assumptions & Limitations

This is an illustration, not a forecast. It assumes a single starting amount with no further deposits or withdrawals, a fixed interest rate for the whole period, and interest that compounds at the frequency you choose. The compound curve is drawn smoothly between periods. Real accounts vary: rates change, savings often have deposits added over time, and a loan you are actively repaying behaves differently from a balance left to grow untouched. Tax is not included.

Calculator Inputs

• Starting amount: The balance you begin with — money you are saving, or a debt you owe.
• Interest rate: The annual interest rate. The higher it is, the more dramatic the gap between simple and compound interest becomes.
• Time period: How long the balance is left to grow, in years or months. Compound interest pulls ahead the longer it runs.
• Compounding frequency: How often interest is added to the balance. Compounding more often than once a year grows the balance faster, though the benefit shrinks as you go from monthly to daily.

Understanding Your Results

The headline figure is what your balance becomes with compound interest at the frequency you picked. Beneath it, you can see what simple interest would have produced instead, and the gap between the two — the compounding effect. The chart plots both over the full period: simple interest as a straight line and compound interest as a curve that pulls away from it. The list at the bottom shows the same amount compounded yearly, quarterly, monthly and daily, so you can see how much the frequency alone is worth.

When you compare real products, the compounding is usually folded into a standard figure: an APR on loans or an APY on savings. And if the balance you are looking at is a debt, paying it down early is worth more than the raw numbers first suggest.