Compound Interest Calculator
Project your savings with compound interest. Enter your deposit, rate, and monthly contributions to see how your balance grows over time.
How compound interest works
Your interest each period is calculated on the current balance - not just the original principal. At monthly compounding, the interest from January becomes part of the balance that earns interest in February. The more frequently interest compounds, the faster the balance grows. Continuous compounding is the theoretical limit of this effect, producing the highest possible balance for a given rate and period. The difference between annual and monthly compounding grows significantly over 10 or more years.
What this doesn't include
This calculator projects pre-tax, pre-fee growth at a fixed rate. Real savings accounts and investments are subject to income tax on interest earned, ongoing management fees (for investment funds), and rates that change over time rather than remaining constant. Inflation also erodes purchasing power - enable the inflation adjustment to see what your balance is worth in today's terms. Use this as a planning tool, not a precise forecast.
Why your bank's projection may differ
Banks calculate compound interest based on daily balances in many countries, even when they credit interest monthly. They may also compound on the basis of a 360-day year rather than 365 days. These conventions produce slightly different outcomes. The calculator uses monthly compounding by default and a 365-day basis. For small differences over short periods, the effect is negligible; over 20 or 30 years with large balances, it may be noticeable.
Frequently asked questions
How does compounding frequency affect returns?
More frequent compounding produces slightly higher returns because interest starts earning interest sooner. Monthly compounding at 6% produces an effective annual rate of about 6.17%, versus exactly 6% for annual compounding. Over long periods this difference compounds into a meaningful amount.
What is the difference between real and nominal returns?
A nominal return is the stated rate before adjusting for inflation. A real return subtracts inflation, showing actual purchasing-power growth. At 6% nominal and 3% inflation, your real return is roughly 3% - your money grows in quantity but less in what it can buy.
Do regular monthly contributions matter much?
Dramatically. Each monthly contribution immediately starts earning compound interest for the rest of the investment horizon. Over 30 years at 7%, contributing £500/$500 a month on top of an initial lump sum can generate far more from the contributions alone than from the starting principal.
What is the Rule of 72?
Divide 72 by the annual interest rate to estimate how many years it takes to double your money. At 6% per year, your money doubles in approximately 72 ÷ 6 = 12 years. It is a useful mental shortcut, though the calculator gives exact figures for any inputs.
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The repayment engines behind this site are tested against worked examples published by FRED, the Bank of Canada, the Bank of England and the Reserve Bank of Australia. Found an error? Contact us