How much does compounding frequency change the outcome?

Less than most people expect. Ten per cent compounded annually is ten; monthly gives 10.47; daily 10.52. The step from annual to monthly is the one worth noticing, and beyond that the gains are negligible.

What is the rule of 72?

Divide 72 by the annual rate for a rough number of years to double. Six per cent doubles in twelve years, nine per cent in eight. It is close enough for mental arithmetic across ordinary rates.

Does this account for inflation?

No — it calculates nominal growth. Subtract your expected inflation rate to see the real figure. Seven per cent nominal with five per cent inflation is two per cent of actual purchasing power.

Why do credit cards cost so much more than the rate suggests?

Because monthly compounding turns three per cent a month into about 42.6 per cent a year, not thirty-six. Interest is charged on interest already added, which is what makes a carried balance grow so fast.

Compound Interest Calculator

Growth on a lump sum, compounded as often as you like.

Everything runs inside your browser. Your files never leave your device.

Result

The result appears here as you type.

Ask about Compound Interest Calculator

Questions about what this tool does, which option to pick, or what it can and cannot handle.

The question you type here is sent to an AI provider to be answered — your files and whatever you put in the tool above are not, and the assistant cannot see them. Answers are generated and can be wrong. The tool itself is not guessing: it runs deterministic code on your device.

About the Compound Interest Calculator

Compound interest is interest that earns interest. It is why long-term saving works and why long-term debt is dangerous, and the effect is consistently larger than intuition suggests.

This calculates growth from a starting amount, a rate, a term and a compounding frequency, with the option to add regular contributions.

Compounding frequency matters less than people expect and more than nothing. Ten per cent compounded annually gives ten per cent; compounded monthly it gives 10.47; compounded daily, 10.52. The gain from monthly to daily is small because the increments are already tiny. That is why comparing products on their effective annual rate rather than the nominal one is the only meaningful comparison — a headline rate quoted at a different frequency is not the same number.

The rule of 72 is the shortcut worth carrying: divide 72 by the interest rate and you have roughly the years to double. At six per cent, twelve years. At nine, eight years. It is accurate enough for mental arithmetic across the range of rates anybody actually encounters.

The same mathematics runs the other way on debt, and credit cards are the clearest case. A card at three per cent monthly is not thirty-six per cent a year — compounded, it is around 42.6 per cent, and a balance left untouched grows at that rate. Paying the minimum on a card is a decision to be compounded against.

Inflation is not modelled here, and it should be in your head. A nominal seven per cent with inflation at five is two per cent of real growth. A projection that ignores inflation over twenty years is not describing purchasing power.

How to use it

1Enter your starting amount, the annual rate and the number of years.
2Set the compounding frequency to match the product you are comparing.
3Add regular contributions if you will be paying in as well as leaving the balance to grow.
4Subtract expected inflation from the rate to see the growth in real terms rather than nominal ones.

Questions

How much does compounding frequency change the outcome?: Less than most people expect. Ten per cent compounded annually is ten; monthly gives 10.47; daily 10.52. The step from annual to monthly is the one worth noticing, and beyond that the gains are negligible.
What is the rule of 72?: Divide 72 by the annual rate for a rough number of years to double. Six per cent doubles in twelve years, nine per cent in eight. It is close enough for mental arithmetic across ordinary rates.
Does this account for inflation?: No — it calculates nominal growth. Subtract your expected inflation rate to see the real figure. Seven per cent nominal with five per cent inflation is two per cent of actual purchasing power.
Why do credit cards cost so much more than the rate suggests?: Because monthly compounding turns three per cent a month into about 42.6 per cent a year, not thirty-six. Interest is charged on interest already added, which is what makes a carried balance grow so fast.