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Compound Interest Calculator (US)

See how your money grows over time with the power of compounding. Add monthly contributions to maximise your results.

Compound interest in the US is most commonly expressed as APY (Annual Percentage Yield) — the effective annual rate after intra-year compounding, calculated as APY = (1 + r/n)^n − 1. Tax-advantaged accounts (401(k), IRA, Roth IRA, HSA) compound tax-deferred or tax-free. IRS publishes annual contribution limits each November.

The US tax code creates four very different compounding regimes, and the same contributed dollar grows at materially different rates in each. Taxable brokerage accounts pay tax on dividends annually (qualified: 0%/15%/20%; ordinary: marginal rate) and capital gains on realisation, creating a 0.5-1.5% annual tax drag. Tax-deferred accounts (Traditional 401(k), Traditional IRA) reduce current taxable income and grow untaxed until withdrawal. Tax-free accounts (Roth IRA, Roth 401(k)) take after-tax money in and return tax-free qualified withdrawals. Health Savings Accounts (HSAs) are triple-tax-advantaged when paired with a High-Deductible Health Plan: deductible in, tax-free growth, tax-free out for qualified medical.

The compound interest formula with monthly contributions is FV = P(1 + r/n)^(nt) + PMT × [((1 + r/n)^(nt) − 1) ÷ (r/n)]. This calculator runs monthly compounding by default — the US market convention for savings accounts (APY), money market funds, CDs, and most brokerage statements.

Historic US equity returns (S&P 500, 1926-2023): approximately 10% nominal, 7% real (CPI-adjusted). Treasury bills: 3-4% nominal, 0-1% real. A balanced 60/40 portfolio: roughly 8% nominal, 5% real. The calculator's real-return toggle uses the BLS CPI series to strip inflation so terminal values are expressed in today's purchasing power.

Three operational considerations the calculator handles: 1. Roth vs. Traditional break-even — depends on current marginal rate vs. expected retirement rate; the calculator solves for the indifference point 2. APR vs. APY distinction — APR understates true compounding return; this matters most on CDs and money markets 3. Required Minimum Distributions (RMDs) beginning at age 73 under SECURE 2.0, rising to 75 by 2033

For current contribution limits and rules, IRS Publication 590-A (IRAs) and Publication 560 (Retirement Plans for Small Business) are authoritative, with annual COLA limits published each November.

Enter Your Details
Your Results
$0
Final Balance
$0
Interest Earned
$0
Total Contributed
0%
Effective Annual Rate
Year-by-Year Growth
Year Balance Interest This Year Total Contributions

How to use this calculator

Takes about 2 minutes.

  1. Enter your starting amount (principal) in the Starting Amount field
  2. Set the annual interest rate you expect to earn
  3. Pick the number of years you'll let the money grow
  4. Choose how often interest compounds — daily, monthly, quarterly, or yearly
  5. Add an optional monthly contribution and click Calculate to see your final balance and year-by-year growth

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Methodology & Sources

This calculator implements the standard compound-interest formula: A = P(1 + r/n)^(nt) + PMT × [((1 + r/n)^(nt) − 1) / (r/n)]. Region-specific tax and rate defaults are sourced directly from each country's primary government source and reviewed against the publication date below.

  • USA: IRS — federal income tax brackets and contribution limits.
  • UK: GOV.UK — HMRC personal allowance, National Insurance, and dividend rates.
  • SA: SARS — personal income tax brackets and tax rebates.

Last verified: May 2026.

Key concepts

Principal vs. interest. Your principal is the money you put in; interest is what the bank or market pays you for letting it sit. Compounding means the interest you earned in year one starts earning its own interest in year two — and the effect snowballs over decades.

Compounding frequency. Interest can be credited annually, monthly, or daily. More frequent compounding gives a slightly higher effective return, but the gap is small compared with what changing the headline rate or time horizon does.

Rule of 72. Divide 72 by your annual rate to estimate how many years it takes your money to double. At 7%, that's roughly 10 years; at 10%, about 7.

Real vs. nominal returns. A 7% nominal return with 3% inflation is only a 4% real return in purchasing-power terms. For long-horizon planning, focus on real returns. The U.S. S&P 500's long-run real return is about 7% before taxes (Federal Reserve and Robert Shiller data).

Tax wrappers matter. Compounding inside an ISA (UK), Roth IRA (US), or TFSA (SA) is tax-free; outside, interest is taxed annually at your marginal rate, which slows growth materially over 20+ years.

Frequently Asked Questions

Should I enter APR or APY as the rate for a US savings account?
Enter APY. APY already reflects intra-year compounding (APY = (1 + r/n)^n − 1), so pairing it with this calculator's monthly compounding default matches how banks quote savings, money market and CD yields. APR understates the true compounding return and is most misleading on CDs and money markets. The calculator's effective annual rate output lets you confirm the APY your inputs actually produce.
How do I model a 401(k) or Roth IRA in this calculator?
Enter your contribution as the monthly amount and your expected return as the rate. Roth 401(k) and Roth IRA balances are tax-free on qualified withdrawal, so the projected figure is what you keep. Traditional 401(k) and IRA balances are taxed at your retirement marginal rate on withdrawal, so reduce the result accordingly. IRS Publications 590-A and 560 carry the current contribution limits, updated each November.
Why does a taxable brokerage account compound slower than a retirement account?
Taxable accounts pay tax on dividends annually (qualified at 0/15/20%, ordinary at your marginal rate) and capital gains on realisation, creating a 0.5-1.5% annual tax drag. That drag reinvests against you every year, so reduce your entered rate by roughly that amount to approximate the after-tax path. Tax-deferred and tax-free wrappers like 401(k)s, IRAs and HSAs avoid the annual leakage and compound the full nominal return.
Does the projection account for Required Minimum Distributions?
No. The calculator compounds your balance to the horizon you set; it does not force withdrawals. Under SECURE 2.0, RMDs from Traditional 401(k)s and IRAs begin at age 73, rising to 75 by 2033, and are taxed as ordinary income. Roth IRAs have no RMDs during the owner's lifetime. Plan to draw down or convert Traditional balances before RMDs push you into a higher bracket.

Written and maintained by , Founder & Editor, FinCalcHub.

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