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Compound interest calculator

Find out how much interest you'll earn with this compound interest formula and calculator.

Compound interest is an effective tool that helps your money grow faster. Unlike simple interest, which is calculated only on the principal amount, compound interest is calculated based on your growing balance, including any interest you’ve already earned. Use this calculator to find out how much you could earn with the power of compound interest.

Compound interest calculator

Calculate your compound interest to find out how much your savings will grow over time. In this calculator, your final value is based on the amount getting compounded daily.

How to use the compound interest calculator

Use these seven steps to determine how much interest you could earn with the calculator.

    1. Fill in the initial deposit, which is the amount of money you plan to deposit when opening the savings account.
    2. Use the drop-down menu to choose whether you plan on adding funds to the account weekly, every two weeks or monthly.
    3. Enter the dollar amount of the ongoing deposits you plan to make.
    4. Fill in the current interest rate offered by the savings account.
    5. Choose a length of time, ranging from one to 40 years, that you plan on leaving your savings in the account.
    6. Click or tap Calculate.
    7. View the total to see what your balance will be when the period ends and how much interest you will have earned.

How often is interest paid?

Most savings accounts calculate interest on a daily basis, but they only pay it into your account once a month or in some cases once every three months. Ideally, you want a bank that pays interest as often as possible because this lets you maximize the amount of interest you’ll earn on your interest. A savings account that pays interest monthly will grow faster than an account that gets paid quarterly, especially if you have a large balance in the account for several years.

Case Study: How compound interest helps your savings grow

To better understand the benefits of compound interest, take a look at how one saver’s account grows depending on any number of factors found with your typical savings account.

Here, Miles deposits $5,000 into a standard savings account that pays interest at a rate of 3.5%.

Interest is calculated daily and deposited into the account at the end of each quarter:

Principal (P)Rate (r)Compound (n)Time (t)Interest earned after 1 year

At that same rate for the next five years, here’s how much he’ll earn:

Principal (P)Rate (r)Compound (n)Time (t)Interest earned after 5 years

If interest is paid annually, here’s where Miles’s interest earnings would stand after five years:

Principal (P)Rate (r)Compound (n)Time (t)Interest earned after 5 years

If interest is compounded daily, here’s interest earnings after five years:

Principal (P)Rate (r)Compound (n)Time (t)Interest earned after 5 years

Note that for accurate calculations, you can’t account for any withdrawals or fees deducted from the balance over the period you’re calculating. Adding to your balance also changes your results. We did say it’s complicated.

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How do banks calculate compound interest?

With most savings accounts, interest is calculated every day on your daily closing balance.

Compound interest formula

Here’s the equation that most banks use for savings accounts:

(Daily closing balance) x (interest rate)

Interest begins to accumulate on the day of your first deposit. It’s then credited into your account on the last day of each month. If you close your account, your accrued interest is deposited on the day it’s closed.

Any interest awarded to your savings account is typically available for use on the same day it’s credited.

How can I calculate the compound interest?

Compound interest is a complicated calculation that’s often easier left to online calculators designed for that purpose. Still, you can refer to the same formula banks use to calculate your compound interest:

Daily closing balance x interest rate percentage / 365

Say you invest $1,000 with an interest rate of 10% compounded annually for five years. Using the compound interest formula, you’ll find that your initial investment of $1,000 earns $100 after the first year, giving you a total of $1,100.

The total amount yielded for the first year will then earn $110 — 10% of $1,100 — as interest for the next year, bringing your balance to $1,210. This amount then becomes the base for compounding for the third year, and so on. After five years, your initial balance would total $1,610 due to compounding interest alone.

How does compound interest work in technical terms?

Think of compounding as a way of earning interest on your interest. A savings account with ongoing compound interest applies interest to the interest that you’re already paid.

For most savings accounts, your interest is compounded monthly — or 12 times in a year. For long-term savings products, like certificates of deposit, the formula or compounding period may differ. You can compare these compounding savings accounts for a better idea of how they stack up.

Calculate using current savings interest rates

Fill in an initial deposit, monthly deposit and number of months to calculate out how much interest you could earn in each of these leading savings accounts.

Name Product Annual Percentage Yield (APY) Fee Minimum deposit to open Interest compounding Offer
Aspiration Spend & Save Account
Finder Rating: 4.2 / 5: ★★★★★
Aspiration Spend & Save Account
Up to 5.00%
$0 per month or $7.99 per month for Aspiration Plus ($5.99 per month if you pay annually)
Deposits are fossil fuel-free. A spend and save combo account with unlimited cash back rewards and deposits insured by the FDIC.
CIT Savings Connect
Finder Rating: 5 / 5: ★★★★★
CIT Savings Connect
Earn an impressive APY on your entire balance. This straightforward online savings account has no monthly service or account opening fees.
Bread Savings™ High-Yield Savings
Finder Rating: 4.3 / 5: ★★★★★
Bread Savings™ High-Yield Savings
Earn competitive interest rates with this high-yield savings account you can open in just minutes. Member FDIC.
UFB Elite Savings
Finder Rating: 5 / 5: ★★★★★
UFB Elite Savings
Earn a 3.01% APY with no minimum deposit or balance amount with this no-monthly-fee savings account.
Quontic Bank High Yield Savings
Finder Rating: 4.6 / 5: ★★★★★
Quontic Bank High Yield Savings
Interest is compounded daily. No monthly service fees. Competitive rates
Save Market Savings
Save Market Savings
Up to 4.46%
0.35% annually (can be waived)
Each time you successfully refer a friend, Save invests an extra $1,000 on both of your behalfs. After a year is up, Save keeps the $1,000 and gives you all the earned interest.
Each time you successfully refer a friend, Save invests an extra $1,000 on both of your behalfs. After a year is up, Save keeps the $1,000 and gives you all the earned interest.
A savings account that invests your interest in the stock market where it can earn an average 4.46% return.

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Compound interest vs simple interest

When interest earned on your balance starts earning interest itself, that is known as compound interest. This is different from simple interest, which earns a set rate of interest only on the principal amount saved.

Bottom line

A savings account with compound interest can help you reach your financial goals sooner, just for letting your money sit in the account. Most of today’s savings accounts use compound interest, but you should check the terms and conditions because it can help your balance grow much faster than an account with simple interest. Or, you can compare some of our top-rated options to find out what other savings accounts are out there.

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