Project interest earned on a balance with regular contributions and any compounding period.
Compound interest accelerates growth because each period's interest itself earns interest in the next period. The effective annual rate (APY) captures the true yearly yield regardless of how often the account compounds. Regular contributions stack on top via the future-value-of-an-annuity formula, which assumes each contribution earns interest for the remaining periods.
Future value with contributions
FV = PV × (1+r)^n + PMT × [(1+r)^n − 1] / r
Effective annual rate
EAR = (1 + r_nominal / n)^n − 1
APR (Annual Percentage Rate) is the nominal rate without accounting for compounding. APY (Annual Percentage Yield, also called EAR) reflects the actual return after compounding within the year. An account with 5% APR compounded monthly has an APY of about 5.116%. For savings accounts, always compare APY.
Yes, but the difference shrinks as frequency increases. Going from annual to monthly compounding on a 5% rate raises APY from 5.000% to 5.116% — meaningful over decades. Going from monthly to daily only adds another ~0.006%. The biggest jump is always from annual to more-frequent compounding.
An annuity-due (start-of-period contributions) earns one extra period of interest on every payment compared to an ordinary annuity (end-of-period). Over 10 years of $100/month at 5%, that difference is about $500 — not huge, but worth knowing when your bank processes deposits.
This calculator assumes a constant rate and contribution. For variable scenarios — laddering CDs, stepping up contributions — run the calculator in segments and treat each segment's ending balance as the next segment's starting balance.