Compound Interest Calculator
Calculate compound interest with different compounding frequencies and see how your money grows.
₹
₹1000₹10000000
%
1%30%
yrs
1 yrs30 yrs
Total Amount
₹1,48,595
Interest Earned
₹48,595
Effective Annual Rate
8.24%
Total₹1,48,595
Principal₹1,00,000
Interest₹48,595
Compound Interest Formula
The compound interest formula is:
A = P × (1 + r/n)n×t
Where P is the principal, r is the annual rate (as decimal), n is the compounding frequency per year, and t is the time in years. The interest earned is CI = A - P.
With ₹1,00,000 at 8% compounded quarterly for 5 years, your total grows to ₹1,48,595 with ₹48,595 in interest.
Frequently Asked Questions
What is compound interest?
Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. Unlike simple interest, compound interest makes your money grow exponentially over time.
How does compounding frequency affect returns?
The more frequently interest is compounded, the higher the effective return. Monthly compounding yields more than quarterly, which yields more than yearly.
What is the difference between compound interest and simple interest?
Simple interest is calculated only on the original principal: SI = P x R x T / 100. Compound interest is calculated on principal plus accumulated interest: CI = P(1 + r/n)^(nt) - P.
What is Effective Annual Rate (EAR)?
The Effective Annual Rate converts the nominal rate with its compounding frequency into an equivalent annual rate. It allows you to compare investments with different compounding frequencies.
Where is compound interest used in real life?
Compound interest is used in fixed deposits, recurring deposits, savings accounts, mutual funds, PPF, and most investment products. Loans also use compound interest.