Most savings accounts, money market accounts and many loans add interest once a month. This calculator fixes the compounding at 12 times per year, so you only need the starting balance, the annual rate and the time.
Monthly Compound Interest Calculator
See how a balance grows when interest is added every month.
Results are estimates for educational purposes and are not financial advice. Actual returns depend on your provider's terms, fees and taxes.
Monthly compounding formula
A = P × (1 + r/12)12 × t
- A
- Balance after t years.
- P
- Starting balance.
- r
- Annual interest rate as a decimal.
- r/12
- The monthly rate — the share of the balance added as interest each month.
- 12 × t
- The total number of months.
The effective annual rate for monthly compounding is (1 + r/12)12 − 1. A 4.5% nominal rate compounded monthly is an effective 4.594% per year.
How to use this calculator
- Enter your starting balance.
- Enter the annual rate — not the monthly rate. The calculator divides by 12 for you.
- Enter the time in years or months.
- Press Calculate to see the balance, interest, effective rate and growth table.
Worked example
You keep $5,000 in a savings account paying 4.5% per year, compounded monthly, for 5 years.
- Monthly rate: 0.045 ÷ 12 = 0.00375 (0.375% per month).
- Number of months: 12 × 5 = 60.
- Growth factor: 1.0037560 = 1.251796.
- Balance: 5,000 × 1.251796 = $6,258.98.
- Interest earned: $1,258.98.
With annual compounding at the same 4.5% the balance would be $6,230.91, so monthly compounding adds $28.07 over five years.
Where monthly compounding applies
- High-yield savings and money market accounts (many compound daily but credit monthly — check the APY).
- Credit card balances, which usually accrue daily and are billed monthly.
- Mortgages and car loans, where interest is calculated monthly on the remaining balance.
- Monthly-compounding fixed deposits and certificates.
Assumptions and limitations
- Interest is added at the end of each month and the rate is constant.
- No deposits or withdrawals. If you save every month, use the regular contributions calculator.
- All months are treated as equal (one-twelfth of a year). Banks that accrue daily on actual calendar days may differ by a few cents.
- Taxes and fees are ignored.
Frequently asked questions
How do I convert an annual rate to a monthly rate?
For a nominal rate compounded monthly, divide by 12: 6% per year is 0.5% per month. If you start from an APY, use (1 + APY)1/12 − 1 instead.
Is monthly compounding better than annual?
For savers, yes, at the same nominal rate — interest starts earning interest sooner. For borrowers, monthly compounding costs slightly more.
How much interest will I earn in one month?
Multiply the balance by the annual rate and divide by 12. The Monthly Interest Calculator shows this month by month.
Can I enter time in months?
Yes — choose “Months”. 18 months is treated as 1.5 years, which is exactly 18 monthly compounding periods.