Compound Interest Calculator

Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. It's what makes long-term investing so powerful — and what makes debt so dangerous when left unpaid.

Compound Interest Formula

Where A is the final amount, P is the principal, r is the annual rate (as decimal), n is compounding frequency per year, and t is time in years.

Compounding Frequency Matters

The more frequently interest compounds, the more you earn. On ₹1 lakh at 10% for 10 years:

• Annual compounding → ₹2,59,374
• Monthly compounding → ₹2,70,704
• Daily compounding → ₹2,71,791

The difference narrows as frequency increases, with diminishing returns beyond monthly.

Rule of 72

A quick mental math trick: divide 72 by the interest rate to get the approximate number of years to double your money. At 8% → 72÷8 = 9 years. At 12% → 72÷12 = 6 years.

Frequently Asked Questions

What is the difference between simple and compound interest?

Simple interest is calculated only on the principal. Compound interest is calculated on principal plus previously earned interest. Over long periods, compound interest grows dramatically faster.

Which savings instruments in India use compound interest?

Fixed Deposits (FDs), Public Provident Fund (PPF), National Savings Certificate (NSC), and mutual fund SIPs all compound. PPF compounds annually; most FDs compound quarterly.