Compound Interest Calculator
Calculate compound interest with daily, monthly, quarterly, or annual compounding. See future investment value, APY, and total interest earned. Supports regular monthly deposits.
fFormula & How It's Calculated
P = Principal · r = Annual Rate · n = Compounding periods/yr · t = Time (yrs)
Frequently Asked Questions (FAQ)
What is compound interest?
Compound interest is interest earned on both the original principal and previously accumulated interest. Formula: A = P × (1 + r/n)^(n×t). It's the foundation of exponential investment growth — Albert Einstein reportedly called it the 'eighth wonder of the world'.
What is APY and how is it different from APR?
APY (Annual Percentage Yield) includes the effect of compounding, making it the true annual return. APR (Annual Percentage Rate) is the nominal rate without compounding. APY = (1 + APR/n)^n – 1. At 5% APR with daily compounding, APY ≈ 5.13%.
How much does daily vs monthly compounding matter?
More frequent compounding increases returns marginally. On $10,000 at 5% for 10 years: Annual → $16,289, Monthly → $16,470, Daily → $16,487. The gap widens significantly over longer time horizons or with higher rates.
The Power of Compound Interest — Daily, Monthly & Annual Compounding
The compound interest calculator demonstrates how money grows exponentially over time. More frequent compounding (daily vs annual) accelerates growth, though the difference narrows as compounding periods increase.
| Scenario | Compounding | Future Value |
|---|---|---|
| $10,000 @ 5% for 10 yrs | Annual | $16,288.95 |
| $10,000 @ 5% for 10 yrs | Monthly | $16,470.09 |
| $10,000 @ 5% for 10 yrs | Daily | $16,486.65 |
| $10,000 @ 7% for 30 yrs | Annual | $76,122.55 |
| $10,000 @ 7% for 30 yrs | Monthly | $81,744.46 |
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