Compound Interest Calculator

How compound interest works

Compound interest is interest earned on your interest. Each period, your balance grows by the rate — and next period that larger balance grows again. Over long stretches this creates a snowball: the gains accelerate because you're earning returns on returns, not just on your original deposit. Adding a regular monthly contribution pours fresh snow onto the ball the whole way down the hill.

This calculator compounds monthly. It grows your starting amount by the monthly rate (annual rate ÷ 12), adds your contribution each month, and repeats for the full term. It then shows three numbers: the final balance, the total you actually contributed (starting amount plus every monthly deposit), and the interest earned — the gap between the two, which is the money compounding made for you.

A worked example

Start with $1,000, add $200 a month, and earn 6% a year for 20 years. You'd contribute $49,000 in total ($1,000 up front plus $48,000 of deposits), but end up with roughly $95,700 — meaning compound growth added about $46,700 on top of what you put in. The longer the time horizon, the more dramatic that gap becomes, which is why starting early beats saving more later.

Why time matters more than amount

• Money invested for 30 years has far longer to compound than money invested for 10 — often outgrowing a much bigger late deposit.
• Small, consistent monthly contributions usually beat occasional large ones because each dollar starts compounding sooner.
• Even a slightly higher rate makes a big long-term difference, because the effect compounds too.

Frequently asked questions