Compound Interest Calculator

💰 How This Calculator Works

Models the growth of an investment or loan where interest is added to the principal and future interest is earned on that combined amount.

🔢 Worked Examples

• $10,000 at 7% compounded annually for 20yr = $38,697
• $10,000 at 7% compounded monthly for 20yr = $40,088
• $1,000/yr added: 30yr at 8% = $122,346

📋 Common Use Cases

Interest calculators cover compound interest, simple interest, and time-value-of-money concepts. Understanding the difference between nominal and effective rates — and how compounding frequency affects returns — can mean thousands of dollars difference over a savings or investment horizon.

• Comparing savings account yields by compounding frequency
• Computing the true annual rate from a monthly-quoted rate
• Projecting investment growth under different return assumptions
• Understanding the "Rule of 72" for doubling time

💡 Did You Know?

Daily compounding at 5% annual grows money to 5.127% effective rate. Compounding matters more the longer you invest — the difference between annual and daily compounding on a 30-year $10,000 investment is over $1,500.

⚠️ Common Mistake

Using annual rates without adjusting for compounding frequency — "8% annual, compounded monthly" uses r/12 per period, not 8% per period.