Compound Interest Calculator
Quick answer
Compound interest pays interest on interest already earned. The final balance is the starting amount multiplied by (1 + rate ÷ compounds per year) raised to the power of compounds per year × years.
Compound interest calculator
Growth on a single deposit, before tax and inflation.
Final balance
33,102
principal plus all compounded interest
Interest earned
23,102
Effective annual rate
6.17 %
Nominal figures before tax and inflation. Subtract your expected inflation rate to see the real return.
The difference between simple and compound interest is small in year one and enormous in year thirty. Simple interest pays a fixed amount each year on the original deposit; compound interest adds each payment to the balance so the next payment is calculated on a larger number.
How often interest is added matters less than people expect. Moving from annual to monthly compounding at the same nominal rate adds only a fraction of a percentage point to the effective return. The rate and the number of years do almost all the work.
Why compounding frequency matters less than the rate
At 6 per cent nominal, annual compounding gives an effective annual rate of exactly 6 per cent, monthly gives about 6.17 per cent and daily about 6.18 per cent. The gap between monthly and daily is worth less than one hundredth of the balance.
The rate itself behaves very differently. Over 30 years, 7 per cent instead of 6 per cent turns a deposit into roughly a third more money. When you compare accounts, read the effective annual rate rather than the nominal rate and the compounding schedule separately.
The rule of 72, and where it breaks
Dividing 72 by the interest rate gives a close estimate of how many years it takes money to double: at 6 per cent, about 12 years. The shortcut is accurate for rates between roughly 4 and 12 per cent.
Outside that band it drifts. At 1 per cent the true doubling time is about 70 years rather than 72, and at 20 per cent it is under 4 years rather than 3.6. Use the calculator for anything you are actually relying on.
Inflation is the number people forget
A balance that grows at 5 per cent while prices rise at 3 per cent is gaining about 2 per cent in purchasing power, not 5. The headline figure below is nominal; subtract your expected inflation rate to see the real return.
This matters most over long terms, because inflation compounds too. Thirty years at 3 per cent inflation roughly halves what a given amount of money buys.
Frequently asked questions
- What is the difference between nominal and effective rate?
- The nominal rate ignores compounding; the effective annual rate includes it. At 12 per cent nominal compounded monthly, the effective rate is about 12.68 per cent. Accounts are easiest to compare on the effective rate.
- Does this include regular contributions?
- No — this calculates growth on a single starting amount. Regular monthly deposits follow a different formula and usually end up dominating the final balance over long terms.
- Is the result before or after tax?
- Before tax. Interest is taxable in most countries, often at your marginal rate or a flat withholding rate, so the amount you keep will be lower.
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Updated 2026-09-20 · all calculators. Results are estimates for guidance, not professional advice.