Compound Interest Calculator
About the Compound Interest
This compound interest calculator shows how money grows over time when the interest you earn is reinvested and itself earns interest. Compound interest is often called the eighth wonder of the world because, given enough time, it turns modest regular savings into substantial wealth — and it works against you just as hard when you carry a high-interest balance on a loan or credit card. The underlying maths is straightforward. Start with a principal, earn interest on it, and then earn interest on that interest. The more often interest compounds — daily, monthly, quarterly, annually — the faster your balance grows, though the difference is modest for short periods and low rates. Over decades it is the single most important factor in long-term investment growth, which is why financial advisers emphasise starting early: the earlier you start, the longer your money compounds and the more dramatic the snowball effect. To use this calculator, enter the amount you are starting with (the principal), your expected annual rate of return, how long you will hold the investment in years, and how often the interest compounds each year. The result shows your final balance and how much of that is pure interest rather than your original principal. For example, £10,000 invested at 5% compounding monthly over 20 years grows to roughly £27,126, of which more than £17,000 is interest earned on interest. Compound interest applies just as powerfully to debt. A credit card balance of £5,000 at 20% interest compounding daily can double in under four years if you only make minimum payments. Use this calculator both ways — to see how your savings can grow, and to understand how much costly debt can grow against you. The earlier you start, the stronger the effect, so small regular contributions made early beat larger contributions made later every time.
How to use this tool
- Enter the principal — the amount you are investing or borrowing today.
- Enter the annual interest rate as a percentage. For a savings account paying 4%, enter 4.
- Enter the number of years you will hold the investment or carry the debt.
- Choose how often the interest compounds — daily, monthly, quarterly, semi-annually, or annually. Daily compounds the fastest.
- Press Calculate to see your final balance and the total interest earned.
Common uses
- Estimating how a retirement or ISA account will grow over decades
- Comparing savings accounts and investment products with different compounding frequencies
- Understanding how fast high-interest credit card debt compounds against you
- Modelling the effect of starting to invest 5 years earlier versus later
Frequently asked questions
What is compound interest?
Compound interest is interest earned on both the initial principal and the accumulated interest from previous periods. Unlike simple interest, it grows exponentially over time.
How often should interest compound?
More frequent compounding yields slightly more returns. Daily compounding earns marginally more than monthly, which earns more than annual. The difference is small at low rates but significant at higher rates over long periods.
What is the compound interest formula?
A = P(1 + r/n)^(nt), where A is the final amount, P is the principal, r is the annual rate, n is compounding frequency, and t is time in years.
What is the rule of 72?
The rule of 72 is a quick mental shortcut: divide 72 by your annual rate of return to estimate how many years it takes your money to double. At 8% per year, your money doubles in roughly 9 years.
Does compound interest work against me on debt?
Yes. On credit cards and other debt, unpaid interest compounds into your balance, so your debt grows exponentially. This is why paying off high-interest debt early is so important.
Why is starting early so important?
Because compounding has an exponential curve, the bulk of your growth happens in the later years. The earlier you start, the more compounding cycles your money goes through, and the smaller the monthly amount needed to hit your goal.