Compound Interest Calculator
Estimate a future balance from principal, nominal annual rate, years, and compounds per year. The tool applies periodic compounding and reports both final balance and interest earned. It uses only the values entered, does not fetch live rates, and is educational rather than financial advice.
Runs locally — files stay on your deviceWhat is the compound-interest formula?
Future value equals principal multiplied by the periodic growth factor for the total number of compounding periods.
Formula: A = P(1 + r/n)^(nt)
Interest earned on principal and prior interest
Compound interest adds each period's interest to the balance, so later periods earn interest on a larger amount. Formula: A = P(1 + r/n)^(nt), where P is principal, r is annual decimal rate, n is periods per year, and t is years.
How it works
The annual percentage is divided by 100 and by the compounding frequency. The periodic growth factor is raised to the total number of periods, then multiplied by principal.
When to use it
- Compare annual and monthly compounding assumptions.
- Estimate savings growth without contributions.
- Check a quoted nominal rate scenario.
When not to use it
- Do not treat the estimate as a guaranteed return.
- Do not use it when deposits, withdrawals, fees, or taxes must be modeled.
- Do not substitute nominal rate for an unknown effective yield.
Worked examples
Annual compounding
- Input
P=1000, r=5%, n=1, t=10- Expected output
1628.89
One 5% period is applied each year.
Monthly compounding
- Input
P=5000, r=4.8%, n=12, t=5- Expected output
About 6353
The annual rate is split across 60 periods.
Zero rate
- Input
P=1200, r=0%, n=12, t=3- Expected output
1200
Without periodic growth the balance is unchanged.
Common mistakes
Entering 0.05 for five percent
The rate field already converts percent to decimal. Correction: Enter 5 for 5%.
Ignoring fees and taxes
The formula models pure compounding only. Correction: Adjust assumptions or use a fuller cash-flow model.
Mixing frequency and years
n is periods per year, not total periods. Correction: For monthly compounding enter 12.
Related operations and differences
Simple Interest Calculator
Simple interest does not earn interest on earlier interest.
CAGR Calculator
CAGR derives an annualized rate from start and end values.
Limitations and privacy
- No recurring deposits, fees, taxes, or variable rates are modeled.
- Results are estimates and depend entirely on entered assumptions.
Inputs remain local. The result is a general estimate, not financial advice.
Frequently asked questions
What formula is used?
A = P(1 + r/n)^(nt).
What does compounds per year mean?
It is how often interest is added annually, such as 12 for monthly.
Does the calculator include deposits?
No. It models one starting principal only.
Is a higher frequency always a dramatic difference?
The effect depends on rate and time and usually becomes incremental at high frequencies.