A walkthrough, end to end.
- 1
Enter the starting principal, annual interest rate, number of years, and compounding frequency.
- 2
The calculator returns your future balance and total interest earned.
- 3
Compare frequencies to see how much faster daily compounding grows vs. annual.
Future value with compounding
Compound interest is interest earned on both the principal AND previously-earned interest. The more frequently it compounds, the faster it grows. With m compounding periods per year and rate r per year:
What you can do with this.
Daily compound interest
Most savings accounts and CDs use daily compounding. The difference vs. annual compounding is small at low rates (cents per $1,000) but adds up over decades — over 30 years on $10K at 5%, daily compounding earns ~$200 more than annual.
Monthly compound interest
Most bonds, investment accounts, and high-yield savings use monthly compounding. It's the standard reference for advertised APY rates.
Investment growth projections
Stock market historical average is ~7% real (after inflation) over long periods. Use this rate to project realistic growth — 10%+ assumptions are common but unlikely after inflation.
Effect of starting early
Compounding rewards time more than amount. $5,000 invested at age 25 grows to ~$54K at age 65 (7% real); the same $5,000 at age 45 grows to only ~$19K. Time is the strongest variable.
Rule of 72
Quick mental math: years to double = 72 / annual rate. At 6% money doubles in 12 years; at 9%, in 8 years. Verify with the calculator for any rate.
APR vs APY
APR is the simple annual rate. APY (Annual Percentage Yield) is the effective rate AFTER compounding. APY > APR whenever compounding is more frequent than annual. The calculator shows both implicitly.
Effect of compounding frequency
Going from annual → daily compounding adds ~3% extra growth at 5% rate over 30 years. Going from daily → continuous (max possible) adds essentially nothing more — the limit is reached fast.
Compound interest 2026 — what's current
High-yield savings accounts in 2026 offer 4–5% APY with daily compounding (Marcus, Ally, SoFi). CDs lock in slightly higher (5–5.5%) for 1–5 year terms. Use the calculator to compare effective growth across products.
Frequently asked.
Simple interest is calculated only on the original principal. Compound interest is calculated on principal + accumulated interest. Over years, compound dramatically outperforms simple — and is the standard for savings, CDs, and investments.
It matters less than people think. Going from annual to daily adds ~3% extra growth at typical rates. Going from monthly to daily adds a fraction of a percent. The rate and time matter far more.
It assumes a constant rate, which real markets don't deliver. For retirement, layer in volatility (or use sequence-of-returns analysis) — the calculator gives the deterministic baseline.
No. Calculations run entirely in your browser. Nothing is sent to a server, no analytics on inputs, no cookies.