What's the difference between simple and compound interest?

Simple interest is calculated only on the principal. Compound interest is calculated on the principal plus previously earned interest, so it grows faster over time.

Compound Interest Calculator

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Calculate compound interest and investment growth over time

Initial Principal ($)

Annual Interest Rate (%)

Time (years)

Compound Frequency

Your Result

$10,048.31

Final balance

Starting Principal: $5,000
Total Interest Earned: $5,048.31
Growth: 101.0%

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Formula Used

A = P(1 + r/n)^(nt)
where P = principal, r = annual rate, n = compounds per year, t = years

Step-by-Step Explanation

1Enter your starting principal, annual interest rate, and time period.
2Choose how often interest compounds (annually, monthly, daily...).
3See your final balance and total interest earned over time.

Worked Examples

Example 1

$5,000 at 7% for 10 years, compounded monthly

P = 5000, r = 7%, n = 12, t = 10

Final amount ≈ $10,048.30

Frequently Asked Questions

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