About Compound Interest
Compound interest means you earn interest on your interest — not just your original principal. Over time, this creates exponential growth. Einstein reportedly called it the "eighth wonder of the world."
The formula
A = P(1 + r/n)^(nt), where P is principal, r is annual rate, n is compounding periods per year, and t is years.
Compounding frequency
More frequent compounding means slightly more growth. The difference between monthly and daily compounding is usually small — what matters most is the rate and time horizon.
Frequently asked questions
How does this compound interest calculator work?
The compound interest calculator applies A = P(1 + r/n)^(nt) to your starting balance and adds optional monthly contributions, showing how your money grows over time with compounding.
What is compound interest?
Compound interest is interest earned on both your original principal and the interest you have already earned. Over long periods this snowball effect grows your money far faster than simple interest.
How does compounding frequency affect growth?
More frequent compounding (daily versus annually) adds slightly more growth, but the interest rate and time horizon matter far more. The tool lets you compare daily, monthly, quarterly, and annual.