Compound Interest Calculator 2025

Compound interest grows your money by earning interest on both your initial deposit and the interest it accumulates, speeding up growth over time. For example, $1,000 at 5% compounded yearly becomes $1,050 after one year, then $1,102.50 after two. It’s a powerful way to build savings.

The formula is A = P(1 + r/n)^(nt), where A is the final amount, P is the starting amount, r is the rate, n is compounding frequency, and t is time. For $1,000 at 5% compounded monthly for 2 years, you’d get $1,104.94. It calculates how interest builds up.

Interest can compound daily, monthly, quarterly, or annually, depending on the account. More frequent compounding, like daily, grows $1,000 at 5% to $1,051.27 in a year versus $1,050 annually. Check your terms to know what applies.

Simple interest is just on the principal (e.g., $50 on $1,000 at 5% yearly), while compound interest adds interest to the total, growing $1,000 to $1,102.50 in 2 years at 5%. Compound interest accelerates growth; simple doesn’t.

Use the Rule of 72: divide 72 by the interest rate (e.g., 72 ÷ 5% = 14.4 years to double $1,000). It’s a fast estimate for planning. Higher rates shorten the time.

It’s powerful because it multiplies your money exponentially over time—like $1,000 at 5% grows to $4,322 in 30 years. The longer it runs, the bigger the payoff. Starting early maximizes its effect.

Yes, with time and consistency—$200 monthly at 7% from age 25 could hit $500,000 by 65. It’s not instant riches but builds wealth steadily. Regular investing is crucial.

It increases loan costs by adding interest to unpaid interest, so a $5,000 loan at 10% compounded monthly grows fast if unpaid. Pay early to cut the total owed. Know your loan’s compounding terms.

A rate of 5-7% is solid for savings or investments, turning $1,000 into $1,628-$1,967 in 10 years. Higher rates beat inflation better. Compare accounts for the best deal.

Use A = P(1 + r/n)^(nt)—plug in your numbers (e.g., $1,000, 5%, monthly, 2 years) to get $1,104.94. Online calculators also work if math isn’t your thing. It’s simple with practice.

Yes, reinvesting stock dividends or gains compounds your returns, like turning $1,000 into $2,000+ over years at 7%. It’s not fixed like savings but can grow similarly. Market risks apply.

Start early, add money regularly, and pick high-rate accounts—$100 monthly at 6% from age 20 could be $200,000 by 60. Time and consistency boost it most. Avoid withdrawals.

Daily compounding grows $1,000 at 5% to $1,051.27 in a year, while annually it’s $1,050—more frequent means more growth. It’s a small edge that adds up. Check your account’s rules.

It’s great for both—savings grow steadily (e.g., $1,000 to $1,628 in 10 years at 5%), while investments can compound faster with higher returns. Investing risks more but rewards more. Match it to your goals.

Many don’t start early, lack funds, or don’t understand it—$50 monthly at 5% from 25 could be $66,000 by 65, but procrastination kills it. Education and discipline are barriers. Awareness helps.