Compound interest calculator
How the projection works
Compound interest is interest earned on both your deposits and earlier interest. This calculator starts with your savings, adds the same deposit at the end of every month and holds your annual percentage yield (APY) constant.
APY already includes compounding over a year. We convert it to an equivalent monthly rate using twelve equal model months; we do not divide APY by twelve. Each month, the existing balance earns interest before the deposit is added. The last deposit therefore earns no interest within the chosen period.
Sources
- CFPB: annual percentage yield calculation explains how APY reflects compounding. Its account-disclosure rules use day counts; they do not prescribe this calculator's equal-month model.
- Carnegie Mellon: interest rates and equivalent periods, section 7.3 gives the relationship between periodic and effective annual interest rates.
The explanation and monthly projection above are our own.