Compound interest
See what compound interest
does to your savings.
Enter a starting amount, a rate, how often it compounds and what you add each month or year. See the final balance, how much of it is growth, and every year's working.
Balance after 10 years
$54,714
- You put in
- $34,000
- Growth
- $20,714
- Share of the total that is growth
- 37.9%
Year by year
| Year | Put in | Growth | Balance |
|---|---|---|---|
| 1 | $2,400 | $801 | $13,201 |
| 2 | $2,400 | $1,033 | $16,634 |
| 3 | $2,400 | $1,281 | $20,315 |
| 4 | $2,400 | $1,547 | $24,262 |
| 5 | $2,400 | $1,832 | $28,495 |
| 6 | $2,400 | $2,138 | $33,033 |
| 7 | $2,400 | $2,467 | $37,900 |
| 8 | $2,400 | $2,818 | $43,118 |
| 9 | $2,400 | $3,196 | $48,714 |
| 10 | $2,400 | $3,600 | $54,714 |
In plain terms
How compounding works, and what actually drives the result
The rate, the years and what you keep adding decide the result; how often interest is added barely does.
Compound interest is interest earned on interest. In the first year a deposit earns interest only on what you put in; from then on it also earns on the interest already added, so the balance grows by a larger amount each year even though the rate never changes. Left alone, 10,000 at 7% compounded monthly becomes 20,096.61 after ten years. Simple interest at the same rate would have added 7,000; the other 3,096.61 is interest earned on interest.
How often interest is added matters less than it sounds. A rate is quoted together with its compounding — 7% compounded monthly pays slightly more than 7% compounded yearly — and the fair way to compare two products is their effective annual rate. This calculator keeps that rate intact whatever you choose: it steps the balance forward at your contribution frequency, using the rate that pays exactly what the stated compounding would over a year. So 8% compounded quarterly is treated as the monthly rate that yields 8.2432% a year, and a lump sum with no deposits lands exactly on the textbook formula.
Regular deposits usually matter more than either. With 200 added at the end of every month as well, the same 10,000 grows to 54,713.58 over ten years, of which 34,000 is money paid in. Whether each deposit lands at the start or the end of its period decides whether it earns that period's interest; the difference is small each time, but it compounds too. The year-by-year figures show what you paid in and what growth added, so you can see when growth starts to outpace your own deposits.
- 7% a year, effective
- Compounded yearly 7.00% · half-yearly 7.12% · quarterly 7.19% · monthly 7.23% · daily 7.25%.
- Lump sum only
- Matches A = P × (1 + r/n)ⁿᵗ exactly, whatever the contribution frequency.
- Deposit timing
- Start of period: earns that period's interest. End of period: does not.
How it's calculated
The working behind the number
This compound interest calculator grows a starting amount and optional regular contributions at a fixed annual rate, compounded yearly, half-yearly, quarterly, monthly or daily. It steps at the contribution frequency using the rate that keeps the stated compounding's effective annual yield, so a lump sum on its own matches P(1 + r/n)ⁿᵗ exactly. Contributions made at the start of a period earn that period's interest; those at the end do not.
Formula
A = P × (1 + r/n)ⁿᵗ + C × ((1 + i)ᵐᵗ − 1) ÷ i
- A
- The balance after t years.
- P
- The starting amount.
- r
- The annual interest rate as a decimal, as quoted with its compounding.
- n
- Compounding periods a year: 1, 2, 4, 12 or 365.
- t
- The number of years.
- C
- The amount added each contribution period. For deposits at the start of each period, the C term is multiplied by (1 + i).
- m
- Contributions a year: 1 or 12.
- i
- The rate per contribution period, (1 + r/n)^(n/m) − 1, which leaves the effective annual rate unchanged.
Assumptions and limits
- The rate is fixed for the whole period.
- Each contribution is the same amount, made every period without a gap.
- Nothing is deducted: no tax on the interest, no fees, and no allowance for inflation.
- The balance is carried at full precision and rounded to two decimal places only when shown.
- The currency is a label only; the arithmetic is the same in any currency.
A worked example
Take $10,000 at 7% a year, compounded monthly, for 10 years, adding $200 at the end of each month.
- Compounded monthly, 7% a year is an effective 7.23% a year.
- You put in $34,000 in total.
- Growth on that money, and on the growth before it, adds $20,714.
After 10 years the balance is $54,714.
Computed by the calculator on this page, from the figures it opens with.
Sources
- U.S. Securities and Exchange Commission, Investor.gov Compound Interest Calculator: annual, semiannual, quarterly, monthly or daily compounding; monthly contributions treated as made at the end of each month — checked 10 September 2026
By The CutYears team · Last reviewed 10 September 2026 · Full methodology
Questions people ask
Does compounding monthly instead of yearly make much difference?
Less than most people expect. At a quoted 7% a year, compounding yearly pays exactly 7%, monthly compounding works out at 7.229% a year and daily at 7.250%. The rate itself and the number of years matter far more, so compare products on their effective annual rate rather than on how often they compound.
Should my deposits be set to the start or the end of each period?
Choose whichever matches when the money actually goes in. A deposit at the start of a month earns that month's interest and one at the end does not, so start-of-period deposits always finish slightly higher. This page defaults to the end — the same assumption the U.S. SEC's Investor.gov compound interest calculator makes for monthly contributions — so the two can be compared directly.
Is the final balance before tax and inflation?
Yes. The calculator applies the rate you enter and deducts nothing — no tax on interest, no account fees, and no allowance for rising prices. To see what the final balance would buy in today's money, take it to the inflation calculator and read its purchasing-power figure over the same number of years.
Which currency does the compound interest calculator use?
Whichever you choose; it starts in US dollars. The currency changes only how amounts are labelled and formatted. The arithmetic of compounding is the same in dollars, pounds, rupees or anything else, so enter the rate your own account or product quotes.