See how your money grows with compound interest over time.
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Final Amount
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Interest Earned
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Total Growth
Principal Interest earned
What is Compound Interest?
Compound interest is the process where interest is earned not only on the original principal, but also on all previously accumulated interest. This "interest on interest" effect causes exponential growth over time, which is why Albert Einstein reportedly called it the "eighth wonder of the world."
The power of compounding is most dramatic over long time periods. A $5,000 investment at 7% interest compounded monthly for 30 years grows to over $38,000 — more than 7.5× the original amount — with over $33,000 coming purely from interest.
How to Use
1Enter your Principal Amount (initial investment).
2Enter the Annual Interest Rate.
3Enter the Time Period in years.
4Choose the Compounding Frequency and click Calculate.
Formula
A = P × (1 + r/n)^(n×t)
Where:
A = Final amount
P = Principal (initial investment)
r = Annual interest rate (decimal)
n = Compounding frequency (times per year)
t = Time in years
Interest Earned = A − P
Growth % = (Interest ÷ P) × 100
Example: $5,000 at 7% compounded monthly for 10 years
A = 5000 × (1 + 0.07/12)^(12×10)
A = 5000 × (1.005833)^120 ≈ $9,980.70
Frequently Asked Questions
Compound interest is interest calculated on both the initial principal and all previously earned interest. It causes investments to grow exponentially over time.
Simple interest is calculated only on the original principal. Compound interest is earned on the principal plus accumulated interest. Over long periods, compound interest generates significantly more growth.
The Rule of 72 is a quick estimation: divide 72 by your annual interest rate to find the approximate years needed to double your investment. At 8%, your money doubles in roughly 9 years (72 ÷ 8).
More frequent compounding yields slightly more growth. Daily compounding produces the most, followed by monthly, quarterly, and annual. The difference becomes more significant at higher rates and over longer periods.
Yes. On loans and credit cards, compound interest works against you — you owe interest on unpaid interest. This is why high-interest debt can grow quickly if not paid off promptly.