Compound Interest Calculator

Compound interest is when the interest generated in each period is added to the balance to generate new interest in the next period. In other words, you earn interest on interest. That is why compound interest is widely used for investments and can also significantly increase debt costs over time.

Fill in the initial amount, interest rate and time. Choose whether the time is in months or years and click "Calculate compound interest". The calculator will show the total interest generated and the final value of the investment or debt. You can adjust the numbers to compare different scenarios.

The calculation uses the classic compound interest formula: A = P × (1 + r)^t, where A is the final amount, P is the principal, r is the interest rate per period in decimal form and t is the number of compounding periods. The interest amount is obtained by subtracting the principal from the final amount, that is: Interest = A − P. If you choose the time in months, the tool converts this time to years by dividing by 12 before applying the formula.

The key difference is that compound interest earns interest on accumulated interest, not just on the original principal. With simple interest, the earned interest never changes — the same amount is added each period. With compound interest, the earned amount grows each period because the base keeps getting larger. Over long time horizons, this 'snowball effect' leads to dramatically different outcomes, which is why compound interest is the foundation of long-term investing.

Yes, but this calculator works with annual or monthly compounding as selected. In general, more frequent compounding (monthly vs. annual) produces a slightly higher final amount for the same nominal rate, because interest is added to the principal more often. For example, 12% compounded monthly is effectively higher than 12% compounded annually. For most everyday comparisons the difference is modest, but it becomes meaningful over many years or at high rates.