Interest Calculator
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- Formula shown
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Results
$10,000.00 plus $200.00 a month at 5% compounded monthly grows to $47,526.55 in 10 years
- Starting amount
- $10,000.00
- Contributions
- $24,000.00
- Interest
- $13,526.55
| Year | Paid in | Interest | Balance | In today's money |
|---|---|---|---|---|
| 1 | $12,400.00 | $567.39 | $12,967.39 | $12,589.70 |
| 2 | $2,400.00 | $719.21 | $16,086.60 | $15,163.16 |
| 3 | $2,400.00 | $878.79 | $19,365.39 | $17,722.07 |
| 4 | $2,400.00 | $1,046.54 | $22,811.93 | $20,268.10 |
| 5 | $2,400.00 | $1,222.87 | $26,434.80 | $22,802.89 |
| 6 | $2,400.00 | $1,408.23 | $30,243.03 | $25,328.06 |
| 7 | $2,400.00 | $1,603.06 | $34,246.09 | $27,845.21 |
| 8 | $2,400.00 | $1,807.87 | $38,453.96 | $30,355.91 |
| 9 | $2,400.00 | $2,023.15 | $42,877.11 | $32,861.73 |
| 10 | $2,400.00 | $2,249.45 | $47,526.55 | $35,364.22 |
Today's-money values assume 3% inflation every year. That is an assumption, not a forecast.
How to use the interest calculator
- Enter the starting amount, the annual interest rate and how often interest compounds. Bank accounts usually compound daily or monthly.
- Enter the time in years. Decimals work, so 18 months is 1.5.
- Add any regular contributions, how often you make them, and whether each one goes in at the start or the end of its period.
- If you want, add the tax rate you pay on interest and an inflation rate. Both are your own assumptions.
- Read the end balance, how much of it is interest, and the year-by-year table. Use "Show all rows" for long terms.
Interest formula with regular contributions
i = (1 + r ÷ m)m ÷ p − 1
Value in today's money = FV ÷ (1 + π)t
P is the starting amount, C the contribution each period, r the annual rate as a decimal, m how many times a year interest compounds, p how many contributions you make a year, t the years and n = p × t the number of contributions. s is 1 when contributions go in at the start of each period and 0 at the end. π is the inflation rate.
The first term is plain compound growth of the starting amount. The second is the future value of an annuity: every contribution, grown for the time it spends in the account. When interest compounds at a different frequency from your deposits, the rate is converted to an equivalent rate per deposit period, the same convention financial calculators use. For continuous compounding the period rate is er ÷ p − 1.
With a tax rate, each year's interest is worked out first, the tax is taken from the balance at the end of that year, and the rest keeps compounding. That is how interest in an ordinary taxable account behaves when you pay the tax each year.
Worked example
You put in $10,000 and add $200 at the end of every month for 10 years, earning 5% a year compounded monthly.
- The monthly rate is 0.05 ÷ 12 = 0.4167%, over 120 months.
- The $10,000 grows to $10,000 × (1 + 0.05 ÷ 12)120 = $16,470.09.
- The 120 deposits of $200 grow to $31,056.46.
- Together that is $47,526.55: $34,000 paid in and $13,526.55 of interest.
- If prices rise 3% a year, that balance buys what $35,364 buys today.
- Paying 22% tax on the interest each year leaves $44,113.30, with $2,852 paid in tax.
Moving each deposit to the start of the month adds one extra month of interest to every payment, giving $47,655.95, which is $129.40 more.
Growth of $10,000 at different rates
A single $10,000 deposit, compounded monthly, with no further contributions and no tax:
| Annual rate | After 10 years | After 20 years | After 30 years |
|---|---|---|---|
| 2% | $12,212 | $14,913 | $18,212 |
| 3% | $13,494 | $18,208 | $24,568 |
| 4% | $14,908 | $22,226 | $33,135 |
| 5% | $16,470 | $27,126 | $44,677 |
| 6% | $18,194 | $33,102 | $60,226 |
| 7% | $20,097 | $40,387 | $81,165 |
| 8% | $22,196 | $49,268 | $109,357 |
| 10% | $27,070 | $73,281 | $198,374 |
The columns do not rise in a straight line. At 8%, the second decade adds more than the first, because interest is earned on a larger balance. That is the core of compounding, explained step by step in the compound interest calculator.
Reading the results
- Nominal and real values are both useful. The balance is the number your statement will show. The today's-money figure shows what that balance buys if prices rise at the rate you entered. Inflation is never known in advance, so treat it as a scenario.
- Tax drag grows with time. In the example, 22% tax costs $3,413 over 10 years, but $41,953 over 30, because the tax money would itself have earned interest.
- APR and APY are different. The effective annual rate (APY) in the results includes compounding. At 5% compounded monthly it is 5.12%.
Tips and common mistakes
- If your bank quotes an APY, choose "Annually" for compounding and enter the APY as the rate. The APY already includes compounding.
- Savings rates change. The calculator holds the rate constant, so rerun it when your rate moves.
- Don't count inflation twice. If you lower the rate to allow for inflation, leave the inflation box blank.
- To find how long a goal takes or how much to save each month, use the savings calculator. For interest that does not compound, see the simple interest calculator.
Frequently asked questions
How is interest calculated on savings with monthly deposits?
The starting amount grows by compound interest, and each deposit grows for the months it spends in the account. For example, $10,000 plus $200 at the end of every month at 5% compounded monthly grows to $47,526.55 after 10 years: $34,000 paid in and $13,526.55 of interest.
What is the difference between the interest rate and APY?
The interest rate (nominal or APR) is the yearly rate before compounding. APY, the annual percentage yield, includes compounding: 5% compounded monthly is an APY of about 5.12%. If your bank quotes an APY, choose annual compounding and enter the APY as the rate.
How does tax on interest change the result?
Tax reduces each year’s interest, and the money paid in tax no longer compounds. In the $10,000 plus $200 a month example, paying 22% tax on interest each year leaves $44,113.30 after 10 years instead of $47,526.55, with $2,852.47 paid in tax.
What does the balance in today’s money mean?
It is the end balance divided by (1 + inflation) for each year, so it shows what the money would buy at today’s prices. With 3% inflation, a balance of $47,526.55 in 10 years buys about what $35,364 buys today. The inflation rate is your assumption, not a forecast.
Is it better to deposit at the start or the end of the month?
Depositing at the start gives every payment one extra month of interest. In the 10-year example, moving each $200 deposit to the start of the month raises the balance from $47,526.55 to $47,655.95, or $129.40 more.