Compound Interest Calculator
Calculate compound interest with flexible compounding frequency — annually, monthly, daily, and more.
How to Use
- 1
Enter principal and rate
Enter your initial investment and annual interest rate.
- 2
Set time and frequency
Enter the time period and select compounding frequency.
- 3
View results
See the total amount and interest earned.
How It Works
Compound interest earns you interest on your interest, not just your original deposit — which is why the same rate produces very different results depending on how often it compounds and how long you leave the money invested.
The formula
A = P × (1 + r/n)^(n×t), where P is principal, r is the annual interest rate (as a decimal), n is the number of times interest compounds per year (1 = annually, 12 = monthly, 365 = daily), and t is time in years. A is the final amount; A − P is the interest earned.
Why compounding frequency matters
More frequent compounding means interest starts earning its own interest sooner. Daily compounding will always produce a slightly higher final amount than annual compounding at the same nominal rate — the difference grows with both the rate and the time horizon.
Examples
₹1,00,000 at 8% annually for 10 years
Annual compounding: A = 1,00,000 × (1.08)^10 ≈ ₹2,15,892. Monthly compounding at the same nominal 8%: A = 1,00,000 × (1 + 0.08/12)^120 ≈ ₹2,21,964 — about ₹6,072 more, purely from compounding frequency.
Compound vs simple interest
Simple interest on the same ₹1,00,000 at 8% for 10 years would be just P + (P×r×t) = 1,00,000 + 80,000 = ₹1,80,000 — roughly ₹36,000 less than annual compounding, and the gap widens every additional year.
Common Use Cases
- Projecting how a fixed deposit, savings account, or lump-sum investment grows over time
- Comparing two banks offering the same rate but different compounding frequency
- Understanding how debt (like credit card balances) also compounds against you if unpaid
- Estimating how long it takes an investment to double at a given rate (see the Rule of 72 below)
Tips
- The Rule of 72 gives a fast doubling-time estimate: divide 72 by the annual rate. At 8%, money roughly doubles in 72 ÷ 8 = 9 years — close to the precise compound-interest answer.
- Time matters more than rate in the long run — money left to compound for twice as long typically grows far more than money earning twice the rate for half the time.
- Compound interest cuts both ways: it grows savings but also grows unpaid debt, which is why carrying a credit card balance is so much more expensive over time than it first appears.
Frequently Asked Questions
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