Compound Interest Calculator
See how your savings or investment grows over time with the power of compound interest. Compare daily, monthly, and annual compounding.
Frequently Asked Questions
What is compound interest and how does it work?
Compound interest is interest earned on both your original principal and previously accumulated interest. The formula is A = P(1 + r/n)^(nt), where P is principal, r is annual rate, n is compounding periods per year, and t is time in years. Einstein reportedly called it the "eighth wonder of the world" — a $5,000 investment at 7% for 30 years grows to over $38,000.
How often should interest compound?
The more frequently interest compounds, the more you earn. Daily compounding yields slightly more than monthly, which beats annual. The effective annual rate (EAR) for 6% compounded daily is 6.183% vs. 6.168% monthly. In practice, the difference is small, but daily compounding is best when available, especially for high balances.
What is the Rule of 72?
The Rule of 72 is a quick mental math shortcut: divide 72 by the annual interest rate to estimate how many years it takes to double your money. At 6% per year, your money doubles in approximately 72 ÷ 6 = 12 years. At 9%, it doubles in about 8 years. The rule is most accurate for rates between 6% and 10%.