The base formula
For a one-time deposit, use A = P(1 + r / n)^(nt). P is principal, r is the annual rate, n is compounding periods per year, and t is time in years.
How-To Guide
How to Calculate Compound Interest
Compound interest means each period earns on both the original principal and the interest already added. The base formula is simple, but recurring deposits are much easier with a calculator.
5 min readUpdated April 8, 2026
Quick steps
- Convert the annual rate into the rate per compounding period.
- Turn the timeline into the total number of compounding periods.
- Multiply the principal by the compound growth factor.
- Add monthly contribution growth separately if needed.
A simple example
If you start with $10,000 at 6% annual return compounded monthly for 10 years, the formula becomes 10,000 x (1 + 0.06 / 12)^120. The future value is about $18,194.
When a calculator is better
A calculator saves time when you add monthly deposits, compare timelines, or want contributions and interest broken out separately.
- Recurring monthly contributions
- Comparing compounding schedules
- Viewing future value and total interest together
Frequently Asked Questions
What is the main difference between simple and compound interest?expand_more
Simple interest grows from principal only, while compound interest also earns on previously accumulated interest.
Does more frequent compounding always help?expand_more
At the same nominal annual rate, more frequent compounding usually produces a slightly higher ending balance.
Can monthly deposits still be calculated by hand?expand_more
Yes, but the math becomes longer and much harder to verify than using a calculator.
Try the compound interest calculator
Enter principal, monthly deposits, return, years, and compounding frequency to compare scenarios instantly.
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