Worked examples
Compound interest examples you can reproduce
Each example states every input, separates deposits from projected interest, and uses the same method as our calculator.
1. Starting balance with annual compounding
Inputs: $1,000 starting amount, no later deposits, 5% fixed annual rate, two years, annual compounding.
Year one adds $50, producing $1,050. Year two applies 5% to $1,050, adding $52.50. The ending balance is $1,102.50, including $102.50 of projected interest. This matches the CFPB's published example.
2. Monthly deposits with no starting balance
Inputs: $0 starting amount, $100 deposited at the end of each month, 6% fixed nominal annual rate, 10 years, monthly compounding.
Total deposits are $12,000.00. The projected ending balance is $16,387.93, so projected interest is $4,387.93. Changing the deposits to the beginning of each month would give every deposit one additional monthly growth period.
3. Starting amount plus monthly deposits
Inputs: $10,000 starting amount, $200 deposited at the end of each month, 6% fixed nominal annual rate, 20 years, monthly compounding.
The later deposits total $48,000.00. Together with the $10,000 starting amount, total money deposited is $58,000. The projected ending balance is $125,510.22, including $67,510.22 of projected interest.
How to check an example
- Enter the starting amount and deposit amount.
- Match the deposit frequency and contribution timing.
- Enter the nominal annual rate and compounding frequency.
- Match the number of years.
- Compare the ending balance, total deposits, and interest separately.
Reproduce all three scenarios in the compound interest calculator. For details about mismatched deposit and compounding schedules, see the calculation method.