Compound Interest Calculator for Kids
See what your child's savings grow into when you pay interest weekly, monthly or yearly — and what that rate will cost you. Built for family banks, so it handles the short timescales kids actually notice.
How to pick a rate for a family bank
The instinct is to copy a real savings account. Do not. At a realistic 4% annual rate, a $50 balance earns about four cents a week. Nothing visible happens, your child stops checking, and the lesson never lands.
Pay an unrealistically high rate on a short cycle instead. The point is not to simulate a bank — it is to compress years of compounding into a timescale a child can actually perceive. Try 1% weekly in the calculator above and watch what a $10 allowance turns into over three years.
Rates that work by age
- Ages 5–7: 2% weekly. Fast, obvious, motivating.
- Ages 8–11: 1% weekly. Still visible week to week.
- Ages 12–15: 2% monthly. Slower, requires patience.
- Ages 16+: 4–5% yearly. Realistic, sets real expectations.
Check what it costs you before you commit
A 2% weekly rate is generous at a $50 balance and expensive at $800. The "costs you, on average" figure above is the number to sanity-check — if it is more than you want to spend, lower the rate or cap the balance that earns interest. Changing the deal later damages the credibility the whole exercise depends on, so it is worth getting right up front.
Where to run it
Calculating this by hand every week is where most family banks quietly die. Bank of Dad applies interest automatically on whatever schedule you set and logs every payment with a running balance — free, with no card and no monthly fee. If you want the background first, read how to run a bank of mom and dad or how to explain compound interest to a kid.
Frequently asked questions
What is a good interest rate to pay your child?
For a family bank, 1–2% per week works well for children under 12 because the growth is visible within a month. Teenagers are better served by something realistic — 4–5% per year — so they form accurate expectations before opening a real account.
How is compound interest calculated?
Each period, the balance is multiplied by one plus the rate, and any new deposit is added. Because the next period's interest is calculated on the larger balance, interest starts earning interest — which is what makes the curve bend upward rather than climb in a straight line.
Is a 1% weekly interest rate realistic?
No, and that is intentional. 1% weekly is roughly 68% per year, far beyond any real account. A family bank is a teaching tool, not a simulation — the high rate exists to make compounding observable on a timescale a child cares about.