Compound Interest Calculator
Calculate compound interest on a lump sum. Enter principal, annual rate, tenure and how often interest is compounded (yearly, half-yearly, quarterly or monthly). Useful for FDs and long-term savings.
Calculate Compound Interest
Compound interest formula
A = Final amount, P = Principal, r = Annual interest rate (as decimal), n = Number of times compounded per year, t = Time in years.
Example
₹1,00,000 at 7% for 10 years, compounded annually: A = 1,00,000 × (1.07)^10 ≈ ₹1,96,715. Interest ≈ ₹96,715.
FAQs
Key Terms
- Maturity amount
- Final value received at deposit end: principal plus accumulated interest.
- Compounding
- Interest earned on both principal and previously earned interest.
- Annualized rate
- Interest rate quoted for one year; converted internally for period-wise calculations.
Benefits of This Calculator
- Quickly compare tenure and rate combinations before locking deposits.
- Understand maturity, principal, and interest split through chart-style outputs.
- Use formula and FAQ context to validate bank app numbers confidently.
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Why compounding feels slow at first, then sudden
Compound interest is famously called the eighth wonder of the world, but in practice most people feel disappointed in the first few years. The reason is arithmetic: in year one your interest is just P × r; the compounding bonus only kicks in starting year two, and even then the extra is small. By year ten or fifteen, the gap between simple and compound interest is no longer a rounding error — it can be 30–50% of the principal itself.
The frequency of compounding also matters. Quarterly compounding, which Indian banks use for FDs, gives you a slightly higher effective annual yield than annual compounding at the same headline rate. Monthly or daily compounding (more common for savings accounts and credit-card debt) is higher still. For most household decisions, the difference between annual and quarterly is real but small; the difference between simple and compound, given enough time, is huge.
₹1,00,000 at 8% — simple vs compound vs quarterly compound
- Simple interest, 10 years
- ₹1,80,000
- Annual compounding, 10 years
- ₹2,15,892
- Quarterly compounding, 10 years
- ₹2,20,804
- Quarterly compounding, 20 years
- ₹4,87,544
Twenty years at quarterly compounding turns ₹1 lakh into nearly ₹4.9 lakh — a 5× return versus a 2.6× return under simple interest. The extra two decades doubled the multiplier.