Compound Interest Calculator
By Hesaplayıcı
The compound interest calculator finds the final amount, the total interest and the effective annual rate when interest is added to the balance at the end of each period. Enter the principal, the rate, the period of the rate, the term and the compounding frequency. Because interest earns interest, the balance grows a little faster every period.
Worked example: 10,000 at 10% a year, compounded monthly, for 5 years
Final amount
16,453.09
- Total interest
- 6,453.09
- Nominal annual rate
- 10.00%
- Effective annual rate
- 10.47%
- Term
- 5 years
Step by step
Nominal annual rate
r = rate × periods per year
r = 10% × 1 = 10.00%
Term
t = years + months/12 + weeks/52 + days/365
t = 5 + 0/12 + 0/52 + 0/365 = 5 years
Final amount
A = P × (1 + r/n)^(n × t)
A = 10,000 × (1 + 10%/12)^(12 × 5) = 16,453.09
Effective annual rate
e = (1 + r/n)^n − 1
e = (1 + 10%/12)^12 − 1 = 10.47%
How to use
- Enter the principal.
- Enter the interest rate and choose its period: yearly, monthly, weekly or daily.
- Enter the Term and choose its unit: years, months, weeks or days.
- Choose the compounding frequency.
- Press Calculate.
Formula
Compound interest uses A = P × (1 + r/n)^(n × t). A is the final amount, P the principal, r the nominal annual rate as a decimal, n the number of compounding periods per year (1 yearly, 12 monthly, 52 weekly, 365 daily) and t the term in years.
The effective annual rate is (1 + r/n)^n − 1. When the term is not a whole number of periods, the last period uses a fractional exponent.
Worked example
The worked example on this page runs the calculator’s first example step by step: the annual rate, the term in years, the final amount and the effective annual rate. When you calculate with your own values, the same steps appear in the result.
Limits
The calculator does not deduct tax, withholding or fees; it shows gross interest. Deposits or withdrawals during the term are not included. The rate stays the same for the whole term.
Frequently Asked Questions
What is compound interest?
Compound interest is calculated on the principal and on the interest added in earlier periods. Because interest is added to the balance at the end of each period, the balance grows faster than with simple interest.
How does compounding frequency affect the result?
At the same nominal rate, the more often interest is added within a year, the higher the final amount. This is why you should compare the effective annual rate when you compare offers.
What is the effective annual rate?
The effective annual rate is the yearly return including the effect of compounding, (1 + r/n)^n − 1. For example, a nominal 12% a year compounded monthly equals an effective rate of about 12.68%.
Calculation rules
- Compound interest is added to the balance at the end of each period: A = P × (1 + r/n)^(n × t). A partial last period uses a fractional exponent.
- A monthly rate is multiplied by 12, a weekly rate by 52 and a daily rate by 365 to get the nominal annual rate.
- In the term, 1 month is 1/12 year, 1 week is 1/52 year and 1 day is 1/365 year. The term is at most 100 years.
- Results are not rounded. The monthly breakdown has at most 1,200 rows.