Compound Interest Calculator

What compounding actually does to your balance

Compounding pays you interest on both your original deposit and every dollar of interest you have already earned, rather than on the starting amount alone. At a 6% annual rate, $15,000 grows to roughly $26,900 in 10 years and to about $48,100 in 20 years, and notice how the second decade adds far more than the first: that acceleration is compounding at work. Plug in your own starting balance, rate and time horizon below to see how your numbers play out.

How to use the compound interest calculator

• Enter your starting amount. Use whatever lump sum you are beginning with, such as $15,000 or $60,000.
• Add a monthly contribution, if you plan to make one. Even a modest recurring deposit changes the ending balance meaningfully over a long horizon.
• Enter your expected rate. Use a realistic annual rate for the account or product you are modeling.
• Set the number of years and the compounding frequency. Choose how long the money will grow and how often interest is credited (annually, monthly, or another schedule), then read the projected ending balance.

What compound interest actually is

Compound interest, sometimes called interest on interest, credits each period's earnings back into your balance so the next period's interest is calculated on a bigger number. Simple interest, in contrast, is always calculated on the original principal alone and never grows on past interest. The difference barely registers in year one, but stretched across a decade or two it becomes the single biggest driver of how much a balance grows, more like a snowball gathering size as it rolls than a straight line moving up.

Three things determine your ending balance: how much you start with, the rate you earn, and how long the money is left alone. Of those three, time tends to matter most. A smaller balance given decades to compound will frequently outgrow a much larger balance that only has a handful of years to work.

Taxable growth vs tax-deferred growth at the same rate

Two accounts earning an identical rate can still end up worlds apart because of how each one is taxed. In an ordinary taxable account or bank CD, every year's interest is reported as income and taxed that year, whether or not you touch the money. Handing a slice to the IRS annually means a smaller balance is left to compound going forward.

Inside a tax-deferred vehicle such as a MYGA, nothing is owed on the growth until the day you withdraw it, so the entire balance keeps compounding uninterrupted year after year. At the same stated rate, that uninterrupted growth wins out over a taxable account, simply because nothing is siphoned off along the way. You still owe ordinary income tax whenever you eventually take a distribution, but until that point the full balance is working on your behalf. The CD vs annuity calculator shows this after-tax gap directly, while the simple vs compound interest calculator strips the comparison down to compounding alone, with no tax question mixed in.

How Ben uses this tool. Ben, 56, has $40,000 parked in a low-yield savings account and is weighing whether to leave it there or move it into a 7-year MYGA instead. He enters $40,000 as his starting amount, a 5.5% rate, and 7 years with annual compounding and no added monthly contribution.

The projection shows his balance reaching roughly $58,000 after seven years if nothing is taxed along the way. In an ordinary taxable account earning the same rate, part of every year's interest would go toward taxes instead of compounding, leaving him with a noticeably smaller ending figure. Because Ben will not need this money for at least seven years and sits in a fairly high bracket today, he leans toward the tax-deferred option.

He then reruns the same numbers out to 15 years and watches the gap between taxed and tax-deferred growth widen further, which confirms for him that the longer the money stays untouched, the more the deferral is worth.

Why time outweighs almost everything else

Because compounding builds on what came before, the second half of a long time horizon contributes far more dollars than the first half does. Using the rule of 72, a balance earning 6% roughly doubles every 12 years. So $15,000 at 6% is worth around $30,000 after 12 years, but the growth does not slow down from there. By year 24, it is close to $60,000, and each additional year adds a bigger dollar amount than the year before it because the balance itself keeps getting bigger.

This is the core appeal of fixed annuities and MYGAs for savers who would rather lock in a rate and let time do the work than actively manage an account. Check current MYGA rates to see what you could lock in today, or run a specific contract through the fixed annuity calculator. When you are ready to compare more tools, browse the full annuity calculators hub.