Compound Interest Calculator

Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. The formula is A = P(1 + r/n)^(nt), where A is the final amount, P is the principal, r is the annual interest rate, n is the number of compounding periods per year, and t is the time in years. Unlike simple interest, compound interest grows exponentially.

More frequent compounding produces more growth. Daily compounding produces slightly more than monthly, which produces more than quarterly or annually. In practice, most US savings accounts compound daily. The difference between daily and monthly compounding is small (less than 0.01% for most rates), but over decades, every fraction matters.

Yes. The same compounding mechanism that grows savings also grows debt. Credit card balances in the US compound daily at rates of 20-30% APR, which is why carrying a balance is so costly. Student loans, mortgages, and personal loans also accrue compound interest. Understanding compound interest is equally important for managing debt as for growing savings.

The Rule of 72 is a shortcut to estimate how long it takes to double your money. Divide 72 by the annual interest rate. At 6%, money doubles in about 12 years (72/6). At 9%, it doubles in 8 years. At the current HYSA rate of about 4-5% in the US, your savings would double in roughly 14-18 years without any additional contributions.

As of 2025, US High-Yield Savings Accounts (HYSAs) at online banks offer 4-5% APY. Traditional savings accounts at large banks may offer only 0.01-0.50%. Money market accounts are similar to HYSAs. Long-term investment accounts (S and P 500 index funds) have historically averaged around 10% nominal or 7% real. Use a rate appropriate for your account type.

Compound interest is interest earned on both the original principal and the interest already accumulated. The formula is A = P(1 + r/n)^(nt). Unlike simple interest, compound interest grows exponentially over time. For UK savings accounts, interest is typically compounded annually or monthly, depending on the product.

Most UK savings accounts compound interest annually (on the account anniversary) or monthly. Cash ISAs and easy-access accounts usually compound annually. Fixed-rate bonds may pay interest annually or at maturity. The AER (Annual Equivalent Rate) is the UK standard rate that accounts for compounding frequency, making it easier to compare products with different compounding periods.

Yes. UK credit card interest typically compounds daily or monthly at 20-30% APR. Mortgage interest compounds monthly on most UK home loans. Understanding how compound interest grows debt is as important as understanding how it grows savings. Paying down high-interest debt is mathematically equivalent to earning that interest rate on an investment.

Divide 72 by your annual interest rate to estimate how many years it takes to double your money. At 4% (typical UK Cash ISA rate in 2025), money doubles in about 18 years. At 7% (typical long-run UK equity return), it doubles in about 10 years. The Rule of 72 helps illustrate why the interest rate you earn matters enormously over long periods.

In 2025, UK Cash ISA rates from easy-access accounts range from 4-5% AER. Fixed-rate bonds offer slightly higher rates for locking in. Premium Bonds offer a tax-free prize rate equivalent of approximately 4.4% AER. UK equity index funds have historically returned around 7-8% per annum over the long term. Use the rate appropriate to your specific product.

Compound interest earns returns on both the principal and previously earned interest. The formula is A = P(1 + r/n)^(nt). In Australia, savings accounts typically compound daily or monthly. Superannuation also earns compound returns on your growing balance, which is one reason starting super early is so impactful.

Most Australian High-Interest Savings Accounts (HISAs) compound interest daily and credit it monthly. Term deposits typically credit interest at maturity or annually. The advertised interest rate on Australian savings products is typically the per annum rate. Check whether the rate shown is before or after fees, as some accounts have monthly fees that reduce effective returns.

Yes. Australian credit card interest compounds daily at 15-22% per annum. Home loan interest compounds monthly on most products. HECS-HELP and FEE-HELP debts are indexed to CPI (not compounded with interest in the traditional sense), but the balance grows with inflation. Paying off high-interest consumer debt always takes priority over savings at a lower rate.

Divide 72 by your annual return rate to estimate years to double your money. At 5% (typical Australian HISA rate in 2025), your savings double in about 14 years. At 7% (conservative long-run super return), money doubles in about 10 years. At 10% (historical Australian equity return), money doubles in about 7 years. This illustrates the power of higher return rates.

As of 2025, Australian HISAs at online banks offer approximately 5-5.5% per annum. Term deposits offer similar or slightly higher rates for fixed periods. Balanced superannuation funds have historically returned 7-8% per annum after fees but before tax over the long run. The ASX 200 has averaged approximately 9-10% per annum nominally over the long term.

Compound interest means your earnings generate their own earnings over time. The standard formula is A = P(1 + r/n)^(nt). Canadian savings accounts typically compound interest daily or monthly. RRSP and TFSA investment accounts earn compound returns on a growing portfolio, which is why maximising contributions early in life is so powerful.

Most Canadian High-Interest Savings Accounts (HISAs) compound interest daily and credit it monthly. GICs (Guaranteed Investment Certificates) typically compound annually, semi-annually, or at maturity. The effective annual rate shown on Canadian products takes compounding frequency into account, making comparison straightforward.

Yes. Canadian credit card balances compound daily at approximately 19.99% per annum. Personal lines of credit and car loans also accrue compound interest. OSAP and federal student loans have fixed or floating interest rates that compound. Understanding compound interest on debt is as important as understanding it on savings; high-rate debt should be eliminated before prioritising savings.

Divide 72 by the annual return rate to estimate how long it takes to double your money. At 4% (typical Canadian HISA rate in 2025), money doubles in 18 years. At 6% (balanced portfolio return), it doubles in 12 years. At 9% (long-run equity return), it doubles in 8 years. This rule illustrates why a higher investment return rate compounds so dramatically.

As of 2025, Canadian HISAs at online institutions (EQ Bank, Simplii, Wealthsimple Cash) offer approximately 4-5% per annum. GICs offer similar or slightly higher rates for fixed terms. Balanced RRSP or TFSA portfolios invested in ETFs have historically returned 5-7% per annum over the long run. The S and P/TSX Composite has averaged 8-9% nominally over the long term.