Compound interest calculator
Set the rate, the years and an optional monthly contribution, and watch compound growth pull away from simple interest.
Result
Compounding is slow at first and relentless later: each year's interest joins the balance, so next year's interest is computed on a bigger number. Time in is the ingredient that does the heavy lifting.
The dashed line is what you put in; the curve is what it becomes. The shaded gap is interest earning interest — it starts thin and does most of its work in the late years.
How is this calculated?
Using the tool
Simple interest pays you on what you put in. Compound interest pays you on what you put in plus everything it has already earned — money making money. Set the rate, the years, and an optional monthly contribution, and watch the curve pull away from the straight line.
The math
Money compounding at a nominal rate r, m times a year, grows by the factor (1 + r/m)^(m·t) — each period earns interest on the balance including all previously earned interest, which is what bends the curve. Monthly contributions are handled with the exact monthly-equivalent rate (1 + r/m)^(m/12) − 1, so the math agrees with the frequency you chose to the cent. The honest single number for comparing offers is the effective annual yield (APY): (1 + r/m)^m − 1 — the same nominal rate compounds to slightly more the more often it is applied.
New to the math? Learn the concept: Business finance, made visual