Compound Interest Calculator
Compound interest is interest earned on your original deposit and on the interest already added to it. Enter an initial amount, an annual interest rate, a time period and how often interest is compounded to see the final amount, the interest earned and the effective annual rate — and how annual, half-yearly, quarterly, monthly or daily compounding compare.
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Your result
Enter your figures and select Calculate.
Final amount
–
- Initial amount–
- Interest earned–
- Effective annual rate–
- Initial amount–
- Interest–
Same inputs at every compounding frequency
| Frequency | Final amount | Effective rate |
|---|
Year-by-year growth
| Year | Interest that year | Balance |
|---|
Rounded to two decimal places. Assumes a fixed rate, no withdrawals, no further deposits, and no tax or fees.
Please note: this is arithmetic on the figures you enter, not a forecast. Real accounts can change their rate, deduct tax or fees, or compound on a different day-count basis. Nothing here is financial advice or a statement about any provider's rates.
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Your year-by-year growth, the effect of compounding frequency, and rate and time comparisons in one downloadable report.
- Year-by-year growth
- Compounding-frequency comparison
- Rate and time-period comparisons
- Growth projection and doubling time
- Key observations
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What is compound interest?
With simple interest, you earn interest on the original amount only. With compound interest, each interest payment is added to the balance, and the next payment is calculated on that larger balance. The interest starts earning interest of its own.
Over a year or two the difference is small. Over decades it becomes the larger part of the final balance. The same mechanism works against you on debt: unpaid interest on a card or loan that compounds is added to what you owe.
How compound interest works
Interest earned is simply A − P. The effective annual rate — what one year of compounding actually adds, expressed as a single yearly percentage — is (1 + r / n)^n − 1. It is the figure that lets you compare two accounts that compound at different frequencies.
Key terms
- Principal — the amount deposited or invested at the start (P).
- Interest rate — the annual rate (r). It is divided by the number of compounding periods, so 8% compounded quarterly adds 2% each quarter.
- Compounding frequency — how many times a year interest is added to the balance (n): annually 1, half-yearly 2, quarterly 4, monthly 12, daily 365.
- Time period — how long the money is left to grow, in years (t). Part-years are allowed.
- Final amount — the balance at the end, A = P × (1 + r/n)^(n × t).
- Interest earned — the final amount minus the principal, A − P.
Example: ₹1,00,000 at 8% for 10 years
The calculator opens with ₹1,00,000 at 8% a year for 10 years, compounded quarterly. Each quarter adds 8% ÷ 4 = 2%, and there are 4 × 10 = 40 quarters.
So ₹1,20,803.97 of the final balance is interest — more than the amount originally deposited. Here is the same deposit at each frequency:
| Compounding | Final amount | Effective annual rate |
|---|---|---|
| Annually | ₹2,15,892.50 | 8.000% |
| Half-yearly | ₹2,19,112.31 | 8.160% |
| Quarterly | ₹2,20,803.97 | 8.243% |
| Monthly | ₹2,21,964.02 | 8.300% |
| Daily | ₹2,22,534.58 | 8.328% |
Factors that affect compound growth
Four inputs decide the result: the starting amount, the interest rate, the time and the compounding frequency. The starting amount works in proportion — double it and every figure doubles. Rate and time work through the exponent, so they matter far more than frequency. The tables use the example above and change one input at a time; they illustrate the formula at a fixed rate, which real savings rates and investment returns do not hold.
Time
| Period (8%, quarterly) | Final amount | Interest earned |
|---|---|---|
| 5 years | ₹1,48,594.74 | ₹48,594.74 |
| 10 years | ₹2,20,803.97 | ₹1,20,803.97 |
| 20 years | ₹4,87,543.92 | ₹3,87,543.92 |
| 30 years | ₹10,76,516.30 | ₹9,76,516.30 |
Each extra decade adds more than the one before: interest earned in the 20th year is far larger than in the first, because it is earned on a much larger balance.
Interest rate
| Annual rate (quarterly, 10 years) | Final amount | Interest earned |
|---|---|---|
| 4% | ₹1,48,886.37 | ₹48,886.37 |
| 6% | ₹1,81,401.84 | ₹81,401.84 |
| 8% | ₹2,20,803.97 | ₹1,20,803.97 |
| 10% | ₹2,68,506.38 | ₹1,68,506.38 |
| 12% | ₹3,26,203.78 | ₹2,26,203.78 |
Compounding frequency, and what this example actually shows
Moving from annual to monthly compounding adds about ₹6,072 over ten years. Moving from monthly to daily adds only about ₹571 more. Frequency matters, but with sharply diminishing returns. By comparison, the rate and the time are far more powerful: at the same 8% compounded quarterly, leaving the money for 20 years instead of 10 more than doubles the final balance again.
That has a practical consequence when comparing accounts. An account advertising “daily compounding” at a lower rate can easily pay less than one compounding annually at a higher rate. Compare the effective annual rates, not the frequency.
Adding money regularly
This calculator follows one deposit. If you add money every month, the SIP calculator projects regular instalments, the investment return calculator combines a starting amount with monthly contributions and fees, and the savings goal calculator works out the monthly amount needed for a target.
Compound interest vs simple interest
Simple interest at 8% on ₹1,00,000 for 10 years is ₹80,000 — 8% of the original amount, ten times. Compounded quarterly, the same deposit earns ₹1,20,803.97, because each quarter’s interest earns interest from then on. The simple interest calculator shows the two side by side for your own figures, and our guide to the effective annual rate explains how to compare accounts that compound at different frequencies.
Assumptions and limitations
- One fixed rate for the whole period. Real savings rates change; investment returns vary and can be negative. For a projection with monthly additions and variable-return caveats, use the investment return calculator.
- No deposits or withdrawals after the start. For regular monthly saving, see the SIP calculator or the savings goal calculator.
- No tax, fees or inflation. Interest is usually taxable, and a balance that grows more slowly than prices is losing purchasing power — the inflation calculator shows by how much.
- “Daily” uses 365 periods a year. Some institutions use 360 days or other conventions, which slightly changes the figure.
Compound interest questions, answered
What is compound interest?
Interest calculated on the original amount and on the interest already added to it. Each time interest is added (compounded), the next interest payment is worked out on the larger balance, so growth speeds up over time.
How does compound interest work?
The annual rate is split across the compounding periods, and interest is added to the balance at the end of each period: A = P × (1 + r/n)^(n × t). ₹1,00,000 at 8% compounded quarterly for 10 years grows to ₹2,20,803.97, of which ₹1,20,803.97 is interest.
Is compound interest better than simple interest?
When you are earning interest, compounding pays more over any period longer than a year, because interest earns interest. When you are paying interest, the same effect works against you. Which is "better" depends on which side of the arrangement you are on; for comparisons, look at the effective annual rate.
How does time affect compound growth?
Strongly, because time is in the exponent. At 8% compounded quarterly, ₹1,00,000 is projected to reach ₹2,20,803.97 after 10 years and ₹4,87,543.92 after 20 — the second decade adds far more than the first.
What is the difference between the interest rate and the effective annual rate?
The interest rate you enter is the nominal yearly rate. The effective annual rate is what that rate actually produces in a year once compounding is included. At 8% compounded quarterly, the effective rate is about 8.24%, because each quarter's interest earns interest in the following quarters. When two accounts compound at different frequencies, the effective annual rate is the fair way to compare them.
Does more frequent compounding make a big difference?
Less than people often expect. On the default example, switching from annual to monthly compounding adds roughly 2.8% to the final amount over ten years, and switching from monthly to daily adds about a quarter of a percent more. The rate itself and the length of time invested matter far more.
Can I use this for a loan?
It shows how an unpaid balance grows if no repayments are made, which is useful for understanding how debt compounds. For a loan you repay in instalments, use the EMI calculator or the car loan calculator instead, because repayments change the balance every month.
Why is my bank's figure slightly different?
Banks may compound on a different schedule from the one they pay out on, count days on a 360-day or actual-day basis, change the rate during the term, or deduct tax at source. Any of these shifts the result a little. The calculator uses the textbook formula with a constant rate.
Is my data sent anywhere?
The calculation runs entirely in your browser using JavaScript on this page; the figures you type are not sent to our server, stored, or saved between visits. Only if you choose to open the detailed report are the amount, rate, period, compounding frequency and the display currency sent to our server, so that the report can be calculated there. If you buy a report, payment is handled by Razorpay and those figures are kept with the order so you can open the report again. No name, email address or phone number is asked for.