Compound interest calculator

How this calculator works

• Interest on interest. Each time interest is added, the next period's interest is calculated on the larger balance. Over a year, 4% added monthly comes to 4.07%; added daily, 4.08%. The card shows that figure as the effective annual rate so a savings account and a GIC can be compared on the same footing.
• The savings account preset adds interest monthly. Canadian savings accounts calculate interest daily and pay it monthly, and monthly compounding reproduces that to within a cent.
• The GIC preset adds interest once a year and switches off regular deposits, because a GIC is a single deposit held to maturity. For a GIC's exact maturity value, including short terms and paid-out interest, use the GIC calculator.
• Deposits go in at the end of each period unless you choose the start; the start-of-period choice earns one extra period of interest on every deposit. Deposits and compounding can run on different schedules (weekly deposits into a monthly-compounding account, say); the calculator converts the rate exactly rather than approximating.
• Today's dollars divides the final balance by inflation compounded over the same years, so you can see what the money would buy, not just the number.
• Results are before tax, assume the rate never changes, and count whole periods.

Using it in a savings plan

The rate matters more than the compounding. Monthly against daily is a few cents on a thousand dollars a year; a rate that is half a point higher is five dollars. Our savings board ranks every high-interest savings rate we track, and compound interest and real rates explains why the number after inflation is the one to watch.

Regular deposits do most of the work early on. In the first years of the table above, deposits dwarf interest; the crossover comes later, and only if the money stays put. That is the case for an automatic transfer on payday, which the weekly and every-two-weeks options are there to model.

Pick the account by when you need the money. A savings account keeps it available at a rate that can change; a GIC locks both the money and the rate. GIC vs HISA walks through the choice, and what a high-interest savings account is covers the fine print, such as promotional rates that expire.

Put it in the right account. Inside a TFSA, RRSP or FHSA the interest is not taxed as it accrues, so the whole figure above is yours; in a non-registered account the interest is taxable income each year. Registered GICs explains how that works for term deposits, and a rate alert tells you when a better rate appears.

How Canadian accounts actually compound

1. Savings accounts: interest calculated daily on the closing balance and paid monthly, which is monthly compounding in effect. The posted rate is an annual rate and can change at any time.
2. GICs: compounded once a year for terms over a year; simple interest for a year or less; a lower posted rate when interest is paid out instead of compounded.
3. Mortgages are different: by law, a fixed-rate mortgage's interest is compounded twice a year, which is why a mortgage calculator uses its own arithmetic. This calculator is for money you are saving, not borrowing.
4. Effective annual rate is the honest comparison: the same posted rate added monthly earns slightly more than added yearly, and the card shows the difference.

Frequently asked questions

What is compound interest?

Interest calculated on the balance including the interest already added, rather than on the original deposit only. The effect is small in year one and large by year ten, which the chart above shows as the interest band widening.

How often do Canadian savings accounts compound?

Monthly, in effect. The institution calculates interest daily and deposits it once a month, and each month's interest earns interest the month after.

Does daily compounding beat monthly?

By a few cents per thousand dollars a year. At 4%, daily compounding yields 4.08% a year and monthly 4.07%. The posted rate and how long the money stays matter far more.

What rate should I use?

For a savings account, the rate you are paid today, knowing it can change; the calculator starts from the best one on our boards. For a GIC, the posted rate for the term you would choose. For an investment, this calculator can model a steady return, but real returns vary year to year.

Is the interest taxed?

In a non-registered account, yes, as ordinary income in the year it is earned. Inside a TFSA it is tax-free; inside an RRSP or FHSA it is sheltered until withdrawal.

Why does the GIC preset switch off deposits?

A GIC is one deposit for one term. Adding money means buying another GIC, usually at a different rate, which is a ladder rather than a single account. The GIC calculator handles a single GIC precisely, including terms under a year.

Sources

Read on 2026-10-18. The prefilled rates come from our own data, not from these pages.

• Bank of Canada investment calculator: annual compounding as the reference convention; 2% as the midpoint of the inflation-control target.
• Tangerine: how interest is applied to savings accounts: calculated daily, paid monthly.
• CIBC GIC calculator, fine print: annual compounding on GICs over a year.
• TD compound interest calculator, assumptions: deposit timing stated.