Compound Interest Calculator

A shortcut for how long money takes to double: divide 72 by the interest rate. At 7%, 72 ÷ 7 is about 10.3 years.

It is close enough to be useful in your head. The exact figure at 7% is 10.24 years, and the rule stays accurate for rates roughly between 5% and 12%.

Less than most people assume, but it is not nothing. On $10,000 at 7% over 30 years, monthly beats annual by $5,042, which is about 7%.

Beyond monthly the gains almost vanish. Daily compounding adds only a few hundred dollars over monthly, so it is not worth choosing an account for.

APR is the plain annual rate before compounding. APY is the effective rate once compounding is included, so it is always the higher of the two.

A 7% APR compounded monthly is a 7.23% APY. Savings accounts advertise APY because it looks better; loans advertise APR for the same reason. Compare like with like.

Because growth is exponential, the last years contribute far more than the first. Money invested at 25 has roughly five extra doublings by 65 compared with money invested at 35.

In practice a smaller amount started ten years earlier often finishes ahead of a larger amount started later. Time is the input you cannot buy back.

It is a common long-run planning figure for a diversified stock portfolio and reasonable for a rough projection. It is not a promise.

Real returns arrive unevenly, with losing years included. Run a pessimistic rate too, particularly if the money is needed on a fixed date.

Yes, and it is the same mechanism in reverse. Credit card balances compound daily, which is why an unpaid balance grows so quickly.

A card at 22% doubles a balance in a little over three years by the rule of 72. Paying down compounding debt is often a better return than any investment.

Mainly the federal funds rate and how badly the bank wants deposits. When the Fed raises its target, savings rates usually follow, though banks pass on increases slowly and cut quickly.

Competition matters as much as policy. Online banks with no branch network routinely pay several times what a large high-street bank offers on an ordinary savings account, on exactly the same day.

A fixed rate stays the same for the whole term, so the payment is predictable from day one. A variable rate moves with an underlying benchmark, so the payment can rise or fall.

Variable rates are usually built as index plus margin. The index moves with the market — most US variable lending now references SOFR or the prime rate, after LIBOR was retired in 2023. The margin is fixed in your agreement and does not change.

Fixed costs a little more at the start and removes the risk. Variable starts cheaper and hands you the risk. The honest test is whether you could still afford the payment if the rate rose by two or three points.

In an insured account, yes, within limits. FDIC insurance covers deposits at member banks up to $250,000 per depositor, per bank, per ownership category. Credit unions are covered equivalently by the NCUA.

That protects the deposit, not the return. Investments are a different matter: they are not insured against loss, and a projection at 7% is an assumption rather than a guarantee.

Yes, and this catches people out: interest is taxed in the year it is credited, even if you never withdraw it and it simply compounds inside the account.

A multi-year CD therefore creates a tax bill each year. Inside a 401(k), IRA or Roth IRA there is no annual tax on the growth, which is a large part of why those accounts compound so much more effectively.