How to Calculate Compound Interest: Formula, Examples and a Table

Simple interest is charged on the original amount only: S = P × (1 + r × t), where P is the deposit, r the rate per period and t the number of periods. Take UAH 100,000 at 14% per year for 5 years: the interest is UAH 14,000 a year, UAH 70,000 over five years, and the balance is UAH 170,000.

Compound interest works differently. Accrued interest is added to the balance, and in the next period the interest is calculated on the larger amount. The same UAH 100,000 deposit at 14% per year with monthly compounding reaches UAH 200,560.98 after 5 years — UAH 30,560.98 more than simple interest, with no extra deposits at all.

The gap grows unevenly: after the first year it is barely noticeable, but over long horizons it becomes decisive. The comparison below uses the same 14% rate throughout:

The calculator on this site capitalises interest monthly, so its figures are higher than with annual capitalisation: 100,000 × 1.14⁵ = UAH 192,541.46 against UAH 200,560.98 with monthly compounding. The same logic works in reverse too — the more often interest is added to the balance, the larger the final sum.

The general formula is S = P × (1 + r / m)^(m × t).

• P — the initial amount: the deposit or investment principal.
• r — the annual rate written as a decimal: 14% becomes 0.14.
• m — the number of compounding periods per year: 12 for monthly, 4 for quarterly, 1 for annual.
• t — the term in years.

Substituting the numbers: P = 100,000, r = 0.14, m = 12, t = 5 gives 100,000 × (1 + 0.14 / 12)^60 = UAH 200,560.98. When the deposit is topped up regularly, each contribution is added with the corresponding compound growth factor.

The compounding frequency affects the result more than people expect. Over one year on UAH 100,000 at 14% you get: annual compounding — UAH 114,000.00, quarterly — UAH 114,752.30, monthly — UAH 114,934.20, daily — UAH 115,024.29. The gap between annual and monthly compounding is UAH 934.20 for a single year, and it grows into tens of thousands over ten years.

A quick way to estimate the doubling time is the rule of 72: divide 72 by the interest rate to get the number of years. At 14% that is about 5.1 years, at 10% about 7.2 years, at 7% about 10.3 years. It is a shortcut for quick estimates, not a replacement for the formula — the exact term comes from solving (1 + r)^n = 2.

The most common case is a deposit that is topped up regularly. Say you put in UAH 50,000 at once and add UAH 5,000 at the end of every month, at 14% per year for 5 years.

Every month the same formula applies: S = S × (1 + r / 12) + deposit, where r = 0.14, so the monthly rate is 1.1667%.

The first steps: after month 1, 50,000 × 1.0116667 + 5,000 = UAH 55,583.33; after month 2, 55,583.33 × 1.0116667 + 5,000 = UAH 61,231.81; after month 3, UAH 66,946.18; after month 6, UAH 84,492.42.

After 60 months the account holds UAH 531,256.12. Your own money is UAH 350,000.00 (50,000 + 60 × 5,000), which means interest added UAH 181,256.12.

Here time matters more than the size of the deposit. If you set aside the same UAH 5,000 a month for 10 years, you end up with UAH 1,295,344.56 on UAH 600,000.00 invested; over 20 years it is UAH 6,505,830.03 on UAH 1,200,000.00 invested. Twice the time gives roughly five times the result — that is how interest on interest works.

Note the timing of the deposits. If you add UAH 5,000 at the beginning of the month instead of the end, you reach UAH 536,284.16 after 5 years — UAH 5,028.04 more. The maths is identical; the interest simply has a full month to accrue on the new money.

Below is the outcome for a UAH 100,000 deposit without regular top-ups, with monthly compounding. One row is one rate, and the columns show the balance after different terms.

With regular deposits the sums are different. Adding UAH 5,000 every month starting from zero, after 5 years you get UAH 357,964.51 at 7% per year, UAH 430,975.63 at 14% and UAH 481,073.26 at 18%, on UAH 300,000.00 invested in total.

The spread between rates widens with the horizon: on UAH 100,000 after 1 year the gap between 7% and 20% is UAH 14,710.10, and after 10 years it is already UAH 525,859.36. That is why it pays to check the term first and the rate second.

Compound interest produces gross returns, before taxes and before inflation. The personal income tax rate in Ukraine is 18%, so the tax is deducted from the accrued interest first, and only then does it make sense to talk about the real gain.

Inflation eats part of the return. If the balance grew by 20% while prices rose by 12% over the same period, the real gain is about 8%, not 20%. The right benchmark is inflation, not zero.

Deposit rates are often nominal. A 14% rate with monthly compounding corresponds to an effective rate of about 14.93% per year, calculated as (1 + r / m)^m − 1. When comparing offers it is worth using the effective rate and deducting the bank fee for opening and servicing the account plus the cost of insurance: on a short term these expenses eat a noticeable share of the interest.

It is also worth checking whether the rate is fixed for the whole term. A fixed rate gives a predictable result, a floating one is higher in some periods and lower in others, and the whole scenario then has to be recalculated.

Compound interest earns its keep when the term is long (3–5 years or more), the money is not needed early, there is a steady stream of deposits, and the rate is above inflation. The effect is smallest over short periods: on UAH 100,000 at 14% for 1 year, the difference between simple and compound interest is only UAH 934.20.

Compound interest also explains how a loan balance grows: the longer you pay, the more interest is charged on the remaining principal. So when you compare a deposit with a loan, look at both sums on the same scale — how much your money grew and how much your debt grew.

The compound interest calculator is the convenient way to run these scenarios: the calculation happens in the browser, no data is sent anywhere, and the result updates as soon as you change the rate, the deposit or the term. That lets you compare several deposit options in a couple of minutes instead of working the formula by hand.

The online compound interest calculator models a deposit with regular top-ups and monthly compounding: enter the starting capital, the monthly contribution and the annual rate, and you immediately get the final balance, the amount of your own money and the interest earned. Everything is computed in the browser, nothing is uploaded.

For one-off arithmetic use the percentage calculator: it finds what a given percentage of a number is, what share a number represents and how large a discount is. And if you are planning a loan and want to compare its cost with the return on a deposit, work out the payment in the loan calculator — the difference between the repayments and the deposit shows whether the plan is worth it.