Compound Interest Calculator

See how your savings and investment account balances can grow with the magic of compound interest.

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Using this compound interest calculator

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  • Try your calculations with monthly and annual contributions and without them.

  • This savings calculator includes an example rate of return. To see the best annual percentage rates you can expect this month, take a look at NerdWallet’s lists of the best high-yield savings accounts and certificates of deposit.

» Ready to begin? Start saving with some of the best high-yield online savings accounts

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What is compound interest?

Compound interest is the interest you earn on your original money and on the interest that keeps accumulating. Compound interest allows your savings to grow faster over time.

Interest calculator example

Let’s say you want to put $10,000 into a high-yield savings account with a 5% annual yield, compounded daily. You don't plan to add additional funds after your first deposit. To calculate earnings, here’s what you would enter into the calculator above:

  • Initial deposit: $10,000.

  • Contribution amount: $0. (Since you won’t be making additional contributions, enter “$0” in the field.)

  • Contribution frequency: Ignore this field.

  • Years of growth: 1. (Start by entering “1”, then you can increase this to see how much you can earn over more years.)

  • Estimated rate of return: 5%.

  • Compound frequency: Daily.

After one year, you’ll earn $512.67 in interest.

If you left your money in that account for another year, you'll earn $538.96 in interest in year two, for a total of $1,051.63 in interest over two years. You earn more in the second year because interest is calculated on the initial deposit plus the interest you earned in the first year.

After 10 years, you will have earned $6,486.65 in interest for a total balance of $16,486.65.

But remember, this is just an example. Savings account APYs are subject to change at any time. For longer-term savings, there are better places than savings accounts to store your money, including Roth or traditional IRAs and CDs.

Compounding with additional contributions

As impressive an effect as compound interest has on savings goals, true progress also depends on making steady contributions. Let’s go back to the savings account example above and use the daily compound interest calculator to see the impact of regular contributions.

  • We started with $10,000 and ended up with $6,486.65 in interest after 10 years in an account with a 5% annual yield. 

  • Now say you deposit an additional $100 at the end of each month into your savings account. (Enter "$100" in the "Contribution amount" field, then select "Monthly" for the "Contribution frequency" option.) You would end up with $32,023.26 after 10 years, compounded daily (assuming 365 days a year). 

  • The interest would be $10,023.26 on total deposits of $22,000. (Review NerdWallet’s round-up of high-yield savings accounts and CDs to see how much interest you could be earning with different options.)

Compounding investment returns

When you invest in the stock market, you don’t earn a set interest rate, but rather a return based on the change in the value of your investment. The value of your investment could go up or down. When the value of your investment goes up, you earn a return.

When the returns you earn are invested in the market, those returns compound over time in the same way that interest compounds.

If you invested $10,000 in a mutual fund and the fund earned a 6% return for the year, it means you gained $600, and your investment would be worth $10,600. If you got a 6% return compounded annually for two years, your investment would be worth $11,236.

In reality, investment returns will vary year to year and even day to day. In the short term, riskier investments such as stocks or stock mutual funds may lose value. But over a long time horizon, history shows that a diversified growth portfolio can return an average of 6% annually. Investment returns are typically shown at an annual rate of return.

The money can add up: If you kept the funds in a retirement account for over 30 years and earned that 6% average return, for example, your $10,000 would grow to more than $57,000.

Compounding can help fulfill long-term savings and investment goals, especially if you have time to let it work its magic over years or decades. You can earn far more than what you started with.

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Frequently asked questions

To calculate interest without a calculator, use the formula A=P(1+r/n)^nt, where:

A = ending amount. P = original balance. r = interest rate (as a decimal). n = number of times interest is compounded in a specific time frame. t = time frame.

Use the formula A=P(1+r/n)^nt. For example, say you deposit $5,000 in a savings account that earns a 5% annual interest rate and compounds monthly. You would calculate A = $5,000(1 + 0.00416667/12)^(12 x 1), and your ending balance would be $5,255.81. So after a year, you’d have $5,255.81 in savings.