What is the compound interest formula?

A = P × (1 + r/n)^(n×t), where A is the final amount, P is the principal, r is the annual rate (as a decimal), n is compounding frequency per year, and t is time in years. Compound interest earned = A − P.

How does compounding frequency affect returns?

More frequent compounding means slightly higher returns. Monthly compounding earns more than annual compounding at the same nominal rate. The difference is larger with higher rates and longer time periods.

What is the Rule of 72?

Divide 72 by the annual interest rate to estimate how many years it takes for money to double. At 8% annual compound interest, money doubles in about 72 ÷ 8 = 9 years.

Can I use this for FD and PPF calculations?

Yes. FD in India typically compounds quarterly. PPF compounds annually. Enter the respective rate and select the matching compounding frequency for an accurate estimate.

Compound Interest Calculator – See How Your Money Grows Over Time

Calculate how an investment or savings account grows with compound interest. Enter principal, annual rate, tenure, and compounding frequency to see the final amount, total interest earned, and a year-by-year breakdown. Compare with simple interest.

Investment Details

Principal Amount (Rs)

Annual Rate (%)

Time Period (years)

Compounding Frequency

Total Value

Rs1,81,669.67

Total Interest

Rs81,669.67

Interest Earned vs Simple

+Rs21,669.67

SI = Rs60,000

Value Breakdown

55%

45%

Principal:Rs1,00,000

Interest:Rs81,669.67

Year-by-Year Growth

Rs1,12,682.5

Rs1,26,973.46

Rs1,43,076.88

Rs1,61,222.61

Rs1,81,669.67

Yearly Schedule

5 years

Year	Opening Balance	Interest Earned	Closing Balance
1	Rs1,00,000	Rs12,682.5	Rs1,12,682.5
2	Rs1,12,682.5	Rs14,290.96	Rs1,26,973.46
3	Rs1,26,973.46	Rs16,103.41	Rs1,43,076.88
4	Rs1,43,076.88	Rs18,145.73	Rs1,61,222.61
5	Rs1,61,222.61	Rs20,447.06	Rs1,81,669.67

Compound Interest Formula

A = P × (1 + r/n)^n×t

P = Principal · r = Annual Rate (decimal) · n = Compounding Frequency · t = Time (years)

CI = A − P

When to Use This Calculator

Planning long-term savings

See how much a fixed deposit, PPF, or recurring investment grows when interest is compounded monthly, quarterly, or annually over time.

Comparing investment options

Compare two investment options with different rates, tenures, and compounding frequencies to see which produces more final value.

Understanding debt growth

Compound interest works against you on unpaid loans and credit card balances. See exactly how fast an outstanding balance grows if left unpaid.

How to Calculate Compound Interest

Enter principal

Provide the starting amount — your initial deposit or investment.

Set rate and tenure

Enter the annual interest rate and the investment period in years.

Choose compounding frequency

Select monthly, quarterly, half-yearly, or annually.

View growth result

See the final amount, total interest earned, and year-by-year growth.

Simple vs. Compound Interest: The Long-Term Difference

On a short deposit of 1–2 years, the difference between simple and compound interest is small. Over 10–20 years, it becomes dramatic. At 8% annual rate on ₹1 lakh: simple interest after 20 years gives ₹1,60,000 in interest (total ₹2,60,000). Compound interest (annual) gives approximately ₹3,66,096 in interest (total ₹4,66,096) — more than double the simple interest return on the same principal. This is why compound interest is called the “eighth wonder of the world” — starting earlier, even with a smaller principal, almost always produces more than starting later with a larger amount.

FD vs. PPF: Which Compounding Frequency Gives Better Returns?

Indian investors commonly compare Fixed Deposits and PPF. FDs typically compound quarterly at rates around 6.5–7.5% depending on the bank and tenure. PPF compounds annually at a government-set rate (currently around 7.1%) with the added benefit of tax exemption under Section 80C and tax-free maturity. On ₹1 lakh at 7% for 15 years, quarterly compounding (FD) gives approximately ₹2,80,679 while annual compounding (PPF) gives ₹2,75,903 — a difference of about ₹4,776. The PPF tax advantage typically more than offsets this gap for taxpayers in the 20–30% bracket. Use this calculator to run both scenarios with your specific numbers.

Frequently Asked Questions

What is the compound interest formula?: A = P × (1 + r/n)^(n×t), where A is the final amount, P is the principal, r is the annual rate (as a decimal), n is compounding frequency per year, and t is time in years. Compound interest earned = A − P.
What is the difference between simple and compound interest?: Simple interest is calculated only on the principal. Compound interest is calculated on the principal plus all previously earned interest — meaning interest earns interest. Over long periods, compound interest grows significantly faster.
How does compounding frequency affect returns?: More frequent compounding means slightly higher returns. Monthly compounding earns more than annual compounding at the same nominal rate. The difference is larger with higher rates and longer time periods.
What is the Rule of 72?: Divide 72 by the annual interest rate to estimate how many years it takes for money to double. At 8% annual compound interest, money doubles in about 72 ÷ 8 = 9 years.
Can I use this for FD and PPF calculations?: Yes. FD in India typically compounds quarterly. PPF compounds annually. Enter the respective rate and select the matching compounding frequency for an accurate estimate.

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