Compound Interest Calculator

Compound interest means earning interest on your interest — not just on the original principal. This creates exponential growth over time, which is why starting to save early makes such a dramatic difference. Simple vs. compound: With simple interest, $10,000 at 5% earns $500/year every year. With compound interest (annual), year 1 earns $500, year 2 earns $525 (5% of $10,500), and so on. After 30 years: simple interest gives $25,000 total; compound interest gives over $43,000. Compounding frequency matters: The more often interest is compounded, the more you earn. Annual < quarterly < monthly < daily. Most savings accounts compound daily or monthly. The Rule of 72: Divide 72 by your interest rate to estimate how many years it takes to double your money. At 6% annual rate: 72 ÷ 6 = 12 years to double. Key insight: Time is the most powerful factor in compound interest. Starting 10 years earlier can double your final balance — even if you invest less total money.