See how savings grow when interest compounds once a year, and how much is interest versus principal.
Try an example
Load a ready-made sample into this tool and run it. Every result you see is calculated live by the tool itself — nothing here is a pre-written answer.
Sample: principal: 10000; rate: 5; years: 3
How to Use
- Enter the principal, annual rate and years.
- Choose yearly compounding.
- Read the final amount and interest earned.
What this compound interest calculator does
This compound interest calculator shows how a lump sum grows when interest is added once a year and then itself starts earning interest. Enter the principal, the annual rate and the number of years, and it returns the final amount split into your original principal and the interest earned. It is a plain illustration of annual compounding, useful for comparing how the rate and the term each change the outcome.
The formula
With yearly compounding the amount is A = P × (1 + r)^t, where P is the principal, r is the annual rate as a decimal and t is the number of years. For example, a rate of 5% means multiplying the balance by 1.05 each year. The interest earned is the final amount minus the principal you started with.
Good to know
Compounding here is annual only. Many real accounts compound monthly or daily, which produces slightly more interest, and this calculator does not model deposits, withdrawals, fees or tax. Treat the result as a clear illustration of the yearly pattern rather than a prediction of any specific account’s eventual balance.
Frequently asked questions
Does this calculator compound monthly?
No. It compounds once a year, matching the standard annual-compounding formula. Monthly or daily compounding needs a different calculation and yields a somewhat higher total, so do not read this result as a monthly account’s figure.
Can I add regular deposits to the calculation?
No. The calculation covers one starting amount left untouched for the term. Regular deposits would each compound for a different length of time, which this tool does not model, as its limitation note states.
Why does the interest grow faster in later years?
Each year’s interest is calculated on the principal plus all interest already added. The base grows annually, so the same rate produces more interest in year ten than in year one.
How to use Compound Interest Calculator
- Enter the principal, annual rate and years.
- Choose yearly compounding.
- Read the final amount and interest earned.
Limitations
Assumes annual compounding with no deposits, withdrawals, fees or tax; other frequencies need a different calculation.