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Compound Interest
Compound interest growth calculator
Compound Interest on Contributions
How It Works
Free compound interest calculator to convert and compare interest rates of different compounding periods, or to gain more knowledge on compound interest.
Compound interest is interest earned on both the principal and on previously accumulated interest. While simple interest is calculated only on the principal amount, compound interest grows exponentially over time because each period's interest is added to the principal, forming a larger base for the next period's interest calculation.
The more frequently interest compounds, the greater the total interest earned. Compounding can occur annually, semi-annually, quarterly, monthly, daily, or even continuously. The Rule of 72 provides a quick approximation: divide 72 by the annual interest rate to estimate how many years it will take for an investment to double.
Compound interest is a powerful force for growing wealth when saving and investing, but it works against borrowers carrying debt. Understanding the effect of different compounding frequencies helps in comparing financial products and making informed decisions.
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