Compound interest calculator
Canada · 2026 rates
Also for United StatesSee how much your savings could grow when interest is added to your balance and then earns interest itself. Add a regular monthly amount to see the effect of saving consistently.
Year-by-year growth
| Year | Paid in | Interest | Balance |
|---|
What is compound interest?
Compound interest means you earn interest on your interest. Each time interest is added, your balance grows, so the next interest payment is calculated on a bigger amount. Over long periods this snowball effect makes a big difference.
Example
Saving $100 a month on top of $1,000, at 4% a year added monthly, grows to $16,215.81 after 10 years. You would have paid in $13,000, so $3,215.81 is interest. Leave it for 25 years and the balance reaches $54,126.72, with $23,126.72 of that from interest.
Putting the full $7,000 TFSA limit in each year (about $583 a month) at 5% grows to about $239,770 after 20 years, of which about $99,770 is tax-free growth.
Where Canadians can earn compound interest
- TFSA: interest and investment growth are tax-free, and withdrawals are not taxed. The 2026 limit is $7,000. See our TFSA room calculator.
- RRSP: contributions reduce your income tax now and grow tax-free until you withdraw them. See our RRSP tax savings calculator.
- GICs and high-interest savings accounts: your money is safe and the rate is known, but interest outside a TFSA or RRSP is taxed as income each year.
Frequently asked questions
How is interest on a GIC compounded?
It depends on the GIC. Some pay simple interest each year, while compound GICs add interest to the balance, usually yearly, and pay it all at maturity. Choose "Yearly" above to model an annually compounding GIC.
Is interest taxed in Canada?
Interest earned outside a registered account such as a TFSA or RRSP is taxed as regular income at your marginal rate, and your bank sends you a T5 slip. Interest inside a TFSA is never taxed.
For illustration only. Real returns depend on the rates you get, and investments can go down as well as up.
Last checked and updated: October 2026