Compound Interest Calculator

How to use

1. Enter what you are starting with and the annual rate the product quotes.
2. Add a regular contribution if you are paying in every period — leave it empty if not.
3. Set the compounding frequency from the product's terms, not from how often you pay in.
4. Compare the final balance against the “without compounding” figure to see what compounding did.

Features

• Nominal annual rate with a separate compounding frequency, the way a term sheet states it.
• Shows the effective annual rate, which is what you actually earn.
• Regular contributions, counted separately from interest.
• A year-by-year table of balance, contributions and interest.
• Runs entirely in your browser.

Frequently asked questions

Why does the effective rate differ from the rate I entered?

Because interest earns interest. 12% a year compounded monthly is 1% a month, and twelve of those multiply out to 12.68% — the effective annual rate. Products quote the nominal rate and state the frequency separately, which is why both are asked for here, and why comparing two products on the nominal rate alone is misleading.

When are contributions added?

At the end of each compounding period, which is the convention for a standing order paid after interest is credited. Paying at the start of the period earns one extra period of interest on every contribution — a small difference that compounds into a visible one over decades.

Does this account for tax or inflation?

No. It is the arithmetic of compounding and nothing more. Interest income is usually taxable, and a balance that grows 6% a year while prices rise 4% has grown about 2% in what it can buy — both matter more than the difference between monthly and daily compounding.

Related tools