Guide
Compound Interest Formula Explained
Compound interest grows the balance on both principal and previously earned interest. The standard formula is A = P(1 + r/n)^(nt).
Finance / Percentage CalculatorsIncludes Compound Interest Calculator
What each variable means
P is principal, r is annual rate as a decimal, n is compounding periods per year, and t is years.
More frequent compounding (monthly vs annual) increases ending balance when the nominal rate is unchanged.
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Frequently asked questions
Is monthly compounding the same as APR?
APR describes borrowing cost; compounding frequency affects how often interest is applied to savings.
This content is for general educational purposes only and is not financial, tax, or legal advice. Examples are illustrative. Consult qualified professionals before borrowing or investing.
Last reviewed: 2026-06-02