How compound interest works

Compound interest calculates growth on the original principal and on interest that has already been added. This makes the timing of contributions and compounding important.

The main inputs are principal, annual rate, time, and the number of compounding periods per year. Small changes to time can have a large effect because growth is repeated over each period.

A calculator shows the result of the inputs you provide. Actual products may include fees, changing rates, taxes, or other terms, so review the relevant agreement before making a financial decision.