Compound interest calculator
Compound interest calculator
What a sum grows to when interest is credited at a set frequency and joins the balance, with the rate you actually earned printed against the rate you typed in.
How this is calculated
Amount = principal x (1 + r/n) raised to n x t, with r the yearly rate, n the number of credits a year and t the term in years. The rate actually earned is (1 + r/n)^n - 1, which is the same figure a year of monthly credits is worth as one lump.
- "What compounding added" is the same sum at the same rate paid once a year instead — the difference between the two products, not a bonus over what you were promised.
- Daily crediting here means 365 credits of the yearly rate divided by 365. A bank that compounds on 360-day interest, or that credits on the lowest balance of the month rather than the closing one, will show a different figure on your statement.
- A rate that changes mid-term — a floating loan, a deposit renewed at a new card rate — cannot be answered by one calculation. Run each stretch separately and add the interest.
One sum left in place while interest is credited at a set frequency and joins the balance. The page prints what you end with, and beside it the rate you were actually paid — which is not the rate you typed in.
The quoted rate and the earned rate are two different numbers
A rate stated as so much per annum, credited more than once a year, pays more than that. Seven per cent credited monthly is 0.5833 per cent twelve times, and twelve of those do not add to seven per cent — they multiply to 7.2290, because each credit is charged on the balance the last one left behind. The line called “rate actually earned” is that figure, and it is the one to use when two institutions quote the same rate on different credit frequencies.
Only “interest is credited” is assumed. Where a bank accrues interest but pays it out to your savings account instead of adding it to the deposit, the deposit itself has not compounded and the interest you spent is a separate sum. Same rate, different arithmetic, and the difference shows up on the maturity figure.
The frequency is the product’s rule, not your choice
Nothing here is a preference. A deposit scheme states its compounding period in the same brochure that states its rate, and the two together are what you are being offered — picking a different frequency in this field does not change your product, it changes whether you are modelling the one you actually hold. Daily crediting on this page means three hundred and sixty five credits of the yearly rate divided by three hundred and sixty five; a bank that uses a 360-day interest year, or that credits on the lowest balance in a month rather than the closing one, will print a smaller figure on your statement.
One sum, not a stream of instalments
This calculation is for money that goes in once and stays. A recurring deposit, a systematic investment plan and a monthly saving are annuities: every instalment has a different number of years to compound, so the total is a sum of twelve or sixty different terms rather than one power. Using this page for a regular instalment will understate what you end with, and understating your own savings is a strange direction for an error to go in.
Questions readers ask
What does “what compounding added” mean?
The gap between your answer and the same sum at the same nominal rate credited once a year. It is not extra money over what you were promised — it is the part of the promise that only the credit frequency delivers.
Why is the gain zero when interest is credited once a year?
Because there is nothing left to add. Annual crediting is the baseline the comparison is made against, so the difference is exactly zero and the effective rate equals the quoted one.
My rate changed halfway through the term. Can this handle it?
Not in one run, and no single-form calculator can. Compute the first stretch to its own maturity, then treat that maturity as the principal of the second stretch at the new rate, and add the two interest figures. The answer is the same either way; the page simply does not know the dates your rate moved on.
More in Interest on money
Finance and debt
Interest on a deposit, the instalment on a loan, what a part payment saves and how long a card balance takes to clear.
- Simple interest calculator Interest charged only on the original sum, for a span you state in years, months or days, with the amount it grows to beside it.
- Compound interest calculator What a sum grows to when interest is credited at a set frequency and joins the balance, with the rate you actually earned printed against the rate you typed in.