How it works
Compound interest pays interest on interest: A = P × (1 + r/n)n×t, where r is the annual rate, n how many times a year it compounds and t the number of years.
- Enter the principal, the annual rate and the term.
- Choose the compounding frequency — yearly, quarterly, monthly or daily.
- The calculator returns the maturity amount; subtract the principal for the interest earned.
The more often interest is added, the more you earn, but the effect is smaller than most people expect: at 10% on ₹1,00,000 for 10 years, yearly compounding gives ₹2,59,374 and monthly gives ₹2,70,704.
Examples
Worked examples:
- ₹1,00,000 at 10% for 10 years, compounded yearly: ₹2,59,374, of which ₹1,59,374 is interest.
- ₹1,00,000 at 7% for 5 years, compounded quarterly: ₹1,41,478.
- Rule of 72: divide 72 by the rate for a quick doubling time — at 9% money doubles in about 8 years (₹1,99,256 from ₹1,00,000).
Related: Grade Calculator, ROI Calculator, Mortgage Calculator.
Compound Interest Calculator: frequently asked questions
- What is the compound interest formula?
- A = P(1 + r/n)^(nt), where P is the principal, r the annual rate (as a decimal), n the compounding periods per year and t the years. Interest = A − P.
- What is the Rule of 72?
- Divide 72 by the annual rate to estimate how many years it takes to double your money. At 8%, about 9 years.
- Does monthly compounding make a big difference?
- Somewhat: 7% compounded monthly is an effective 7.23% a year, versus 7% compounded annually.