Compound Interest Calculator
Calculate compound interest with various compounding frequencies and compare with simple interest.
Compound Interest
Simple Interest (for comparison)
Simple vs Compound: Year-by-Year
| Year | Simple | Compound |
|---|---|---|
| 1 | $10,800.00 | $10,800.00 |
| 2 | $11,600.00 | $11,664.00 |
| 3 | $12,400.00 | $12,597.12 |
| 4 | $13,200.00 | $13,604.89 |
| 5 | $14,000.00 | $14,693.28 |
| 6 | $14,800.00 | $15,868.74 |
| 7 | $15,600.00 | $17,138.24 |
| 8 | $16,400.00 | $18,509.30 |
| 9 | $17,200.00 | $19,990.05 |
| 10 | $18,000.00 | $21,589.25 |
Compound Amount in Other Currencies
Understanding Compound Interest
Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. Albert Einstein reportedly called it the eighth wonder of the world. The formula is: A = P(1 + r/n)^(nt), where P is principal, r is annual rate, n is compounding frequency, and t is time in years.
Simple vs Compound Interest
Simple interest is calculated only on the principal: SI = P x R x T. Compound interest calculates interest on interest, leading to exponential growth over time. The difference becomes more dramatic with higher rates, longer time periods, and more frequent compounding.
The Rule of 72
A quick way to estimate how long it takes to double your money: divide 72 by the annual interest rate. At 8% interest, your money doubles in approximately 9 years (72/8). This rule works best for rates between 6% and 10%.