Project your future wealth with compound interest.
Use this free savings calculator to see how your money can grow over time. Enter your starting balance, regular monthly contributions, and interest rate (APY) to visualize the power of compound interest.
Compound Interest Calculator
Project your savings growth over time with monthly contributions.
| Year | Start Balance | Contributions | Interest | End Balance |
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How It Works
Compound interest is often called the "eighth wonder of the world" because of its ability to multiply wealth exponentially over time. Unlike simple interest, which is calculated only on the principal amount, compound interest is calculated on the principal plus the accumulated interest.
Key Definitions
- Principal: The money you deposit initially. This is the seed for your future growth.
- Monthly Contribution: The amount you add to your savings account every month. Regular contributions are the most powerful way to grow wealth over time.
- APY (Annual Percentage Yield): The real rate of return earned on your savings, taking into account the effect of compounding interest.
- Compounding Frequency: How often the bank pays you interest. Daily compounding grows faster than monthly or yearly compounding.
Frequently Asked Questions
How accurate is this savings calculator?
This calculator provides a mathematical projection based on the inputs you provide. However, it assumes a fixed APY for the entire duration. In reality, bank rates fluctuate based on the Federal Reserve's benchmark rates.
What is the difference between APY and APR?
APR (Annual Percentage Rate) is typically used for loans and does not include compounding. APY (Annual Percentage Yield) is used for savings and investments and does include the effects of compounding.
Do I have to pay taxes on interest?
Generally, yes. In the United States, interest earned on bank accounts (savings, checking, CDs) is considered taxable income by the IRS.
Is my money safe in an online savings account?
Yes, as long as the bank is a member of the FDIC (Federal Deposit Insurance Corporation). FDIC insurance protects your deposits up to $250,000 per depositor, per insured bank.
