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Guess first: You save $5,000 now plus $200 a month at 4% interest. About how much do you have after 10 years?
The answer: $36,904.
Source: Our calculation, monthly compounding, Oct 2026
How the compound interest calculator works
Enter a starting amount, a monthly deposit, an annual interest rate and a number of years. The calculator adds interest every month, so each month’s interest is paid on your deposits plus all the interest earned so far. Deposits are added at the end of each month.
It starts with $5,000 up front, $200 a month, 4% a year and 10 years. The 4% reflects the APYs that NerdWallet says many online banks offer, “around 4% or higher,” as of October 2026. For comparison, the FDIC national average for savings accounts was just 0.38%.
Investor.gov sums up the idea in one line: compound interest is the interest you earn on interest. The SEC’s own calculator uses the same inputs, plus a compounding frequency and a range of rates to test.
Why the rate matters most
Here is the same plan, $5,000 now plus $200 a month for 10 years, at real average rates from October 2026.
| Rate | Where it comes from | Balance after 10 years | Interest earned |
|---|---|---|---|
| 0.38% | FDIC national savings average | $29,652 | $652 |
| 0.63% | FDIC money market average | $30,090 | $1,090 |
| 1.62% | Average high-yield savings (Curinos via Experian) | $31,913 | $2,913 |
| 1.76% | FDIC 1-year CD average | $32,182 | $3,182 |
| 4% | Rates many online banks offer (NerdWallet) | $36,904 | $7,904 |
Source: our calculation; rates from FDIC national rates as reported by NerdWallet (Oct 19, 2026) and Experian (Oct 8, 2026). You deposit $29,000 in every case.
Same deposits, very different results. The 4% account earns about 12 times as much interest as the 0.38% account over 10 years (our calculation). We compare account types in CD vs high-yield savings.
Time does the heavy lifting
Compound growth starts slow and speeds up. With $5,000 up front and $200 a month at 4%, the balance is about $36,904 after 10 years, $84,468 after 20 years and $155,377 after 30 years (our calculation).
A single $10,000 deposit shows the same curve:
| Years | At 0.38% | At 4% |
|---|---|---|
| 10 | $10,387 | $14,908 |
| 20 | $10,789 | $22,226 |
| 30 | $11,207 | $33,135 |
Source: our calculation, monthly compounding, no further deposits.
The Rule of 72
For a quick estimate, divide 72 by the rate to get the years it takes to double. Investor.gov and the St. Louis Fed both teach it. At 4%, money doubles in about 18 years; at 0.38%, it would take about 189 years (our calculation). The St. Louis Fed shows the rule is an approximation: $5,000 at 12% for 36 years comes to about $295,680 in the SEC calculator, not the $320,000 the rule suggests.
Daily, monthly or yearly compounding
More frequent compounding helps, but less than people think. On $10,000 at 4% for 10 years (our calculation):
| Method | Balance after 10 years |
|---|---|
| Simple interest (no compounding) | $14,000 |
| Compounded yearly | $14,802 |
| Compounded monthly | $14,908 |
| Compounded daily | $14,918 |
Source: our calculation.
That is why banks quote APY. Chase describes APY as the yearly return that includes compounding, and banks must disclose it under the Truth in Savings Act. A 4% rate compounded monthly equals about a 4.07% APY (our calculation). When you compare accounts, compare APYs.
- 0.38% (savings avg)$29,652
- 0.63% (money market avg)$30,090
- 1.62% (high-yield avg)$31,913
- 1.76% (1-year CD avg)$32,182
- 4%$36,904
Source: Our calculation; rates from FDIC via NerdWallet and Curinos via Experian, Oct 2026
Example: saving $200 a month for 30 years
Say you save $200 a month from scratch, with no starting balance, at 4% compounded monthly.
| Step | Amount |
|---|---|
| Your deposits over 30 years ($200 x 360) | $72,000 |
| Balance after 30 years | About $138,810 |
| Interest earned | About $66,810 |
| Balance if you keep going to 40 years | About $236,392 |
Source: our calculation.
Interest ends up almost equal to everything you put in. The last 10 years earn about $41,455 of interest, more than the first 20 years combined at about $25,355 (our calculation). That is the case for starting early. The St. Louis Fed makes the same point with a hypothetical 8% return: $5,000 a year from age 25 to 35 grows to about $787,180 by 65, more than $5,000 a year from 35 to 65, at about $611,730. Neither rate is guaranteed. Savings rates change, and investments can lose value.
What people actually report
- 63% of adults said they would cover a $400 emergency expense with cash or its equivalent in the Federal Reserve’s survey of 2025, unchanged from 2024.
- 73% said they were doing at least okay financially in 2025, per the same survey.
- 91% cited price increases as a concern, which matters for savers because consumer prices rose 3.7% in the 12 months to September 2026, per BLS.
Keep in mind
- Inflation. If your rate is below inflation, your balance grows but buys less. At 0.38%, savings lost ground to the 3.7% CPI increase over the past year.
- Taxes. The IRS treats interest from bank accounts, money market accounts and CDs as taxable income in the year you can use it.
- Safety first. Keep an emergency fund in an account you can reach quickly, and use sinking funds for known costs so you do not break into long-term savings. Our average savings by age guide shows where households stand.
The calculator shows how compounding works; it does not predict returns and is not financial advice.
See how we research every number on our method page, browse more saving and investing guides, or try all our calculators.
Before you count on compound growth
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Questions people ask
How does compound interest work?
Compound interest is interest earned on interest, as Investor.gov puts it. In its example, $100 at 5% a year grows to $105 after one year and $110.25 after two, because the second year's interest is also paid on the first year's $5.
Source: Investor.govHow much will $10,000 grow in 10 years?
At 4% compounded monthly, about $14,908 (our calculation). At the 0.38% national average savings rate, about $10,387. The rate you earn makes most of the difference.
Source: Our calculation, NerdWallet (FDIC)What is the Rule of 72?
A shortcut for doubling time: divide 72 by the annual rate. The St. Louis Fed notes money doubles in about 36 years at 2% and about 6 years at 12%. At 4%, that is about 18 years (our calculation). It is an estimate, not an exact answer.
Source: St. Louis Fed, Investor.govWhat is the average savings account interest rate?
The FDIC national average was 0.38% for savings, 0.63% for money market accounts, 1.76% for 1-year CDs and 1.41% for 5-year CDs for mid-October to mid-November 2026, as reported by NerdWallet. Experian cites a 1.62% average for high-yield savings accounts (Curinos data, Oct 2026).
Source: NerdWallet (FDIC), ExperianIs daily compounding better than monthly?
Slightly. On $10,000 at 4% for 10 years, daily compounding gives about $14,918, monthly about $14,908 and yearly about $14,802 (our calculation). Chase notes more frequent compounding raises the effective return, and the gap grows over longer periods.
Source: Chase, our calculationWhat is the difference between APY and interest rate?
APY includes the effect of compounding over a year, while the interest rate does not. Chase describes APY as the real rate of return you can expect from a deposit account in a year, and banks must disclose it under the Truth in Savings Act. A 4% rate compounded monthly is about a 4.07% APY (our calculation).
Source: Chase, our calculationWhat is the difference between simple and compound interest?
Simple interest is paid only on the original deposit; compound interest is also paid on interest already earned, Chase explains. On $10,000 at 4% for 10 years, simple interest adds $4,000, while monthly compounding adds about $4,908 (our calculation).
Source: Chase, our calculationHow much will $200 a month be worth in 30 years?
At 4% compounded monthly, about $138,810, of which $72,000 is your own deposits (our calculation). Rates on savings accounts change over time, so treat this as an illustration, not a forecast.
Source: Our calculationWhy does starting early matter so much?
Because early deposits have more years to compound. In a St. Louis Fed example at a hypothetical 8% return, someone who invests $5,000 a year from 25 to 35 and stops has about $787,180 at 65, more than someone who invests $5,000 a year from 35 to 65, at about $611,730.
Source: St. Louis FedIs interest on savings taxable?
Yes. The IRS says interest on bank accounts, money market accounts and CDs is taxable income in the year it becomes available to you. You should get Form 1099-INT if you earned $10 or more, but you must report all interest either way.
Source: IRSDoes compound interest beat inflation?
Only if your rate is higher than inflation. Consumer prices rose 3.7% in the 12 months to September 2026, per BLS, so money earning the 0.38% national savings average lost buying power over that period. The St. Louis Fed also reminds savers that future dollars buy less.
Source: BLS, NerdWallet (FDIC), St. Louis FedDoes compound interest work against me on debt?
Yes. The St. Louis Fed explains that on a loan, interest builds on the unpaid balance and on past unpaid interest, which is how credit card debt can grow quickly.
Source: St. Louis FedSources
Every number above comes from these pages. We list the date each page showed when we checked it.
- NerdWallet, Average Bank Interest Rates for Savings Accounts, CDs and More (FDIC national rates)
- NerdWallet, What Is APY?
- Experian, Current Average Savings Interest Rates
- Investor.gov (SEC), What is compound interest?
- Investor.gov (SEC), Compound Interest Calculator
- Federal Reserve Bank of St. Louis, How Does Compound Interest Work?
- Chase, How to calculate APY
- IRS, Topic no. 403, Interest received
- BLS, Consumer Price Index News Release, September 2026
- Federal Reserve, Economic Well-Being of U.S. Households in 2025 (press release)
For general information only, not financial advice. Rates and rules change, so check with your bank or a licensed advisor before you decide.
- Passed Level II of the CFA® Program
- Canadian Securities Course (CSC)
- Conduct and Practices Handbook (CPH)
Sepehr Parsa is a financial planner and the founder and editor of DollarMap. He has passed Level II of the CFA Program and completed the Canadian Securities Course (CSC) and the Conduct and Practices Handbook (CPH) course. He writes and edits our guides on cars, home repairs, budgeting, saving and investing, and checks that every number has a source.
“In a slowing economy, a budget is what keeps you afloat.”
