Compound Interest Calculator

Work out compound interest with yearly, half-yearly, quarterly, monthly or daily compounding — and see exactly how much more you earn than with simple interest.

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How to use this calculator

  1. Enter principal amount
  2. Enter annual interest rate
  3. Enter time period
  4. Choose compounding frequency — How often interest is added to the balance. Indian bank deposits usually compound quarterly.
  5. Read the result — it updates as you type.

The formula used

A = P × (1 + r/n)n×t

A
Final amount (principal + interest)
P
Principal — the amount you start with
r
Annual rate as a decimal (8% = 0.08)
n
Times interest is compounded per year
t
Number of years

The interest itself is A − P.

Compare this with simple interest, SI = P × R × T ÷ 100, where interest is only ever calculated on the original principal. The gap between the two grows quickly with time — that gap is the whole point of compounding.

Worked example

₹1,00,000 at 8% for 5 years, compounded quarterly.

  • Principal (P)₹1,00,000
  • Rate per quarter (r/n)0.08 ÷ 4 = 0.02
  • Number of quarters (n×t)4 × 5 = 20
  1. (1 + 0.02)20 = 1.485947
  2. ₹1,00,000 × 1.485947 = ₹1,48,595
  3. Interest earned = ₹1,48,595 − ₹1,00,000 = ₹48,595

Simple interest on the same deposit would be only ₹40,000 — compounding adds about ₹8,595.

What compound interest actually means

Simple interest pays you on your original amount, forever. Compound interest adds the interest to your balance, so next time you earn interest on a bigger number. That is the entire difference, and over long periods it is enormous.

Why frequency matters (a little)

Compounding more often gives a slightly higher return, because interest starts earning sooner. ₹1,00,000 at 8% for 5 years gives ₹1,46,933 yearly, ₹1,48,595 quarterly and ₹1,48,985 monthly. The jump from yearly to quarterly is real but modest — the length of time matters far more than the frequency.

Effective annual rate

When a bank says "8% compounded quarterly", you actually earn 8.24% a year. That 8.24% is the effective annual rate, and it is the honest number to use when comparing two products with different compounding frequencies.

Compounding works against you too

Credit card debt compounds monthly at rates of 30–45% a year. The same maths that builds wealth on the way up destroys it on the way down.

Tips and common mistakes

Getting more out of it

  • Use the effective annual rate when comparing two products quoted at different compounding frequencies — that is the only fair comparison.
  • Try the same rate over 5, 10 and 20 years. The gap over simple interest widens dramatically with time, which is the whole point.

Mistakes to avoid

  • Comparing a monthly-compounded rate with a yearly-compounded one as if they were the same. 8% compounded monthly is really 8.30% a year.
  • Using this for regular monthly deposits. It compounds one lump amount — the RD Calculator handles instalments.
  • Forgetting tax on interest, which is charged every year on deposits and quietly reduces the compounding.

Frequently asked questions

What is the difference between simple and compound interest?

Simple interest is always calculated on the original amount. Compound interest is calculated on the original amount plus the interest already added. Over 5 years at 8% on ₹1,00,000, simple interest pays ₹40,000 and quarterly compounding pays ₹48,595.

Which compounding frequency do Indian banks use?

Most fixed deposits compound quarterly. Savings accounts usually calculate interest daily and credit it quarterly. Always check the specific product.

What is the rule of 72?

A quick mental shortcut: divide 72 by the interest rate to estimate the years needed to double your money. At 8%, that is about 9 years. The exact answer here is 9.006 years, so the shortcut is remarkably good.

Does this calculator handle regular deposits?

No — it compounds a single amount. For a monthly deposit, use the RD Calculator or the SIP Calculator.

Is the interest taxable?

Interest from deposits is generally added to your income and taxed at your slab rate. This calculator shows the pre-tax amount.

Simple Interest Calculator

Interest that does not compound: P × R × T ÷ 100.

Fixed Income FD Calculator

Maturity value of a fixed deposit with compounding.

Fixed Income Lump Sum Calculator

Growth of a one-time investment at an expected annual return.

Investment RD Calculator

Maturity value of a monthly recurring deposit.

Fixed Income SIP Calculator

See what a monthly SIP could grow into over time.

Investment CAGR Calculator

Compound Annual Growth Rate between a start and end value.

Investment
Disclaimer: These calculators are for educational and informational purposes only. Results are estimates based on the inputs provided and should not be considered financial, investment, tax, or legal advice.