Compound Interest

Compound interest pays interest on the interest already earned. With principal P, an annual rate r, compounding n times a year and a term of t years, the final balance is P × (1 + r/n)^(n×t). This page lets you switch the compounding frequency between yearly, quarterly and monthly so you can see how much that choice is actually worth.

How to use

1. Enter the starting principal.
2. Enter the annual rate as a percentage. If a product quotes a monthly rate, multiply by twelve first.
3. Enter the term in years.
4. Pick the compounding frequency and compare the final balance against the interest portion.

When you actually need this

• Estimating how long a deposit takes to reach a target amount.
• Comparing an account that compounds annually against one that compounds monthly.
• Putting an inflation rate in the rate field to see what today's money is worth later.
• Seeing how an unpaid balance grows if it is left to accumulate.

Frequency, and the rule of 72

At the same headline rate, more frequent compounding produces a larger balance. Five percent over ten years turns one unit of principal into 1.629 compounding annually and 1.647 compounding monthly — a small gap that widens with time and size. For a quick mental estimate of how long money takes to double, divide 72 by the rate: at six percent, roughly twelve years. This calculation ignores tax and fees, so an account whose interest is taxed at source will pay out less than the interest figure shown here.

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FAQ

What formula does Compound Interest use?

It uses the standard published formula for this calculation, applied exactly as written with no rounding until the final result. The inputs you provide are the only variables — there are no hidden assumptions or regional adjustments.

How accurate is the result from Compound Interest?

The arithmetic is exact to the precision your browser supports. Accuracy in practice depends on your inputs: an estimate built on rounded figures will itself be an estimate, so enter the most precise values you have.

Can I use this for official or financial decisions?

Treat the output as a well-calculated estimate rather than professional advice. For medical, tax, legal or lending decisions, confirm the figure with a qualified professional or the institution involved before acting on it.