Compound Interest Calculator
Enter your principal, rate, and tenure. See the exact rupee difference between yearly, quarterly, and monthly compounding.
Year-wise Compound Growth
What is a Compound Interest Calculator?
A Compound Interest calculator shows you the final value of your investment when interest earns interest. Enter the principal, rate, time, and compounding frequency. Get the maturity amount, total interest earned, and a direct comparison with simple interest.
What is Compound Interest?
Compound interest means your interest earns more interest. With simple interest, you earn the same fixed amount every period based on the original sum. With compound interest, each period's interest gets added to your balance. The next period's interest is then calculated on the higher balance. This is why longer investment periods produce significantly bigger returns.
Benefits of Using a Compound Interest Calculator
Use this calculator to:
- See the gap grow – Track how compound interest pulls ahead of simple interest each year
- Compare frequencies – See the exact rupee difference between monthly, quarterly, and yearly compounding
- Plan investments – Calculate the future value of any amount at any rate and tenure
- Compare options – Pick the deposit or investment with the highest effective yield
- Visualize growth – See year-by-year growth in the chart below the calculator
How is Compound Interest Calculated?
The compound interest formula is:
A = P(1 + r/n)nt
Variables:
- A = Final maturity amount (principal + interest)
- P = Principal (your starting amount)
- r = Annual interest rate as a decimal (10% = 0.10)
- n = Compounding periods per year (12 for monthly, 4 for quarterly, 1 for yearly)
- t = Time in years
Example: ₹1,00,000 at 10% p.a. for 5 years, compounded quarterly:
- A = 1,00,000(1 + 0.10/4)20 = ₹1,63,862
- CI = ₹63,862 vs SI = ₹50,000
- Extra ₹13,862 from compounding!
Frequently Asked Questions About Compound Interest
What is compound interest with example?
Put Rs.10,000 at 10% per year. Year 1: Rs.1,000 interest, total Rs.11,000. Year 2: 10% applies to Rs.11,000, so you earn Rs.1,100, total Rs.12,100. Year 3: Rs.1,210. By Year 5: Rs.16,105. Simple interest over the same period gives Rs.15,000. The extra Rs.1,105 comes from interest earning interest each year. The longer you stay invested, the wider this gap gets.
What is the Rule of 72?
The Rule of 72 gives you the approximate years to double your money. Divide 72 by your annual interest rate. At 8%, your money doubles in 9 years (72 divided by 8). At 12%, it doubles in 6 years. At 6%, it takes 12 years. It is not perfectly precise, but accurate enough for quick planning without a calculator.
Which compounding frequency is best?
More frequent compounding produces better returns. Rs.1 lakh at 10% for 5 years: yearly compounding gives Rs.1,61,051. Quarterly gives Rs.1,63,862. Monthly gives Rs.1,64,531. Daily gives Rs.1,64,866. The difference between yearly and daily compounding is Rs.3,815 on Rs.1 lakh. Most banks use quarterly compounding for FDs. Always check the compounding frequency when comparing two deposits with the same interest rate.