Compound interest calculator
United States · 2026 rates
Also for CanadaSee how much your money could grow when interest is added to your balance and then earns interest itself. Add a monthly deposit to see the effect of saving regularly.
Year-by-year growth
| Year | Paid in | Interest | Balance |
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What is compound interest?
Compound interest means you earn interest on your interest. Each time interest is credited, your balance grows, so the next interest payment is calculated on a bigger amount. Over long periods, this snowball effect makes a big difference.
Example
Saving $250 a month on top of $5,000, at 4.5% a year compounded monthly, grows to about $45,634 after 10 years. You would have deposited $35,000, so about $10,634 is interest. Keep going for 30 years and the balance reaches about $209,085, with more than $114,000 of it from interest.
Where compound interest works for you
- High-yield savings accounts pay interest daily or monthly and are FDIC-insured up to $250,000 per depositor, per bank.
- Certificates of deposit (CDs) lock in a rate for a set term, usually with a penalty for early withdrawal.
- Retirement accounts such as a 401(k) or Roth IRA let investment growth compound without yearly tax, which can add a lot over decades.
Frequently asked questions
What is the difference between APY and the interest rate?
APY (annual percentage yield) shows what you earn in a year once compounding is included. If interest compounds monthly or daily, the APY is slightly higher than the stated interest rate. Banks must show APY so accounts can be compared fairly.
Is interest on savings taxed?
Yes. Interest from savings accounts and CDs is taxed as ordinary income in the year it is paid, and your bank sends a Form 1099-INT. Growth inside a 401(k), traditional IRA or Roth IRA is not taxed each year.
How often should interest compound?
More frequent compounding earns slightly more, but the difference between daily and monthly is small. The rate itself and how long you leave the money matter far more.
For illustration only. Real returns depend on the rates you get, and investments can lose value.
Last checked and updated: October 2026