Compound interest calculator
A compound interest calculator in rands. Enter a principal, a rate and a term; the balance, total interest and a year by year table update as you type, with monthly, quarterly or annual compounding.
Growth
Year by year
| Year | Opening | Added | Interest | Closing |
|---|---|---|---|---|
| 1 | R100 000 | R0 | R8 300 | R108 300 |
| 2 | R108 300 | R0 | R8 989 | R117 289 |
| 3 | R117 289 | R0 | R9 735 | R127 024 |
| 4 | R127 024 | R0 | R10 543 | R137 567 |
| 5 | R137 567 | R0 | R11 418 | R148 985 |
| 6 | R148 985 | R0 | R12 366 | R161 350 |
| 7 | R161 350 | R0 | R13 392 | R174 742 |
| 8 | R174 742 | R0 | R14 504 | R189 246 |
| 9 | R189 246 | R0 | R15 707 | R204 953 |
| 10 | R204 953 | R0 | R17 011 | R221 964 |
How this compound interest calculator works
Interest is added to the balance at the end of every compounding period, and the next period’s interest is calculated on the larger amount. With no additions the closing balance is P × (1 + r ÷ n)n×t, where P is the principal, r the annual rate as a decimal, n the number of compounding periods a year and t the term in years.
A worked example: R100 000 at 8% for 10 years with no additions closes at R215 892 compounded annually, R220 804 quarterly and R221 964 monthly. The R6 072 gap between annual and monthly is the compounding frequency alone, on the same rate and the same money.
South African banks and money market funds quote rates as nominal annual compounded monthly (NACM), which is what the rate field expects. The effective annual rate shown in the results is what that nominal rate actually earns over a full year once compounding is included. It is the number to use when comparing two accounts that compound at different frequencies.
Monthly additions are accumulated and credited at the end of each compounding period, so a monthly addition under annual compounding earns no interest until the year closes. That is a simplification; a bank that credits interest monthly would compound each addition sooner.
Interest earned outside a tax free account is taxable above the annual exemption of R23 800 for people under 65 (R34 500 at 65 and over). This calculator shows interest before tax; the TFSA calculator shows the same money with and without it, and the investment calculator adds fees, escalation and inflation for money in a fund rather than a bank account. The calculators sit alongside TradeIntel’s JSE and US share screener as free reference tools.
Questions
How much difference does monthly compounding make over annual?
At 8% nominal, monthly compounding gives an effective rate of about 8.30% against 8% for annual. Small in year one, and it widens every year because the difference itself compounds. On R100 000 over ten years it is about R6 000.
Is this the same as an interest calculator for a savings account?
Yes, if your account credits interest at the frequency you select and the rate stays fixed. Rates on most South African savings accounts change with the repo rate, so rerun it when yours changes.
Why does my bank quote both a nominal and an effective rate?
The nominal rate is the headline figure before compounding. The effective rate includes it. Two accounts with the same nominal rate but different compounding frequencies pay different amounts, and the effective rate is what makes them comparable.
TradeIntel is an information publisher, not a licensed financial services provider. This calculator shows what the assumptions you entered produce. It is general information, not financial advice, and the return figure is your assumption, not ours. Nothing on this page is a forecast.