How to Use the Compound Interest Calculator
- Enter your starting principal amount.
- Add the annual interest rate and the number of years.
- Choose how often interest compounds (yearly, monthly, daily).
- Optionally add a recurring monthly contribution to see accelerated growth.
Frequently Asked Questions
What is compound interest?
Compound interest is interest calculated on your initial principal plus all the interest that has accumulated in previous periods, so your balance grows faster over time than with simple interest.
Why does compounding frequency matter?
The more often interest compounds (daily vs. yearly), the more total interest you earn, because earned interest starts generating its own interest sooner.
What is the compound interest formula?
A = P(1 + r/n)^(nt), where P is principal, r is the annual rate, n is the number of compounding periods per year and t is the number of years.
Can I model regular deposits?
Yes. Adding a monthly contribution shows how consistent investing dramatically increases your final balance thanks to compounding.
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