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Calculates

Compound Interest Calculator

Calculate how your money grows with compound interest over time.

Calculated & verified for mathematical accuracy·Reviewed by the Calculates Editorial Team

Deposit details

0 – 10,00,00,000

The lump sum invested once at the start, with nothing added later.

0 – 30

Enter the advertised nominal rate — the effective rate is worked out below.

1 – 50

20 compounding periods in total

Compounding frequency

Maturity amount

₹1,63,862

Value after 5 years at 10% nominal, compounded quarterly.

Principal
₹1,00,000
Total interest
₹63,862
Effective annual rate
10.38%
Gain on principal
63.86%
  • Principal₹1,00,000
  • Interest₹63,862

Simple interest on the same deposit would pay ₹50,000. Reinvesting each payout adds ₹13,862 on top.

About this calculator

Compound interest is interest that earns interest. Each time a payout is credited it joins the balance, so the next payout is calculated on a larger sum and growth accelerates rather than staying flat. This calculator shows what a one-off deposit becomes over a chosen term, how much of that is interest, and what effective annual rate your chosen compounding frequency really delivers.

How to use this calculator

  1. Enter the principal

    The single amount you are depositing or investing at the start. This calculator models a lump sum left untouched — if you plan to add money every month, the RD or SIP calculator is the right tool.

  2. Enter the nominal annual rate

    Use the headline rate the bank or scheme advertises, before any compounding adjustment. The calculator works out the effective rate for you, so you should not pre-convert it yourself.

  3. Set the term in years

    How long the money stays invested. Because growth is exponential rather than linear, the final years of a long term contribute far more rupees of interest than the first ones do.

  4. Switch the compounding frequency

    Move between annual, half-yearly, quarterly and monthly crediting with the rate held constant. The gap that opens up between the maturity figures is the entire value of more frequent compounding.

Formula

A = P × (1 + r / n) ^ (n × t)
  • A is the maturity amount — principal plus all accumulated interest.
  • P is the principal, the lump sum deposited at the start of the term.
  • r is the nominal annual rate expressed as a decimal: 8.5% becomes 0.085.
  • n is the number of times interest is credited per year: 1 annually, 2 half-yearly, 4 quarterly, 12 monthly.
  • t is the term in years. n × t is therefore the total count of compounding events.
  • Total interest is A − P. The effective annual rate, (1 + r/n)^n − 1, restates the same deal as a single yearly rate so offers with different crediting schedules can be compared fairly.

Worked example

Inputs

  • Principal (P): ₹1,00,000
  • Nominal annual rate (r): 10%
  • Term (t): 5 years
  • Compounding: Quarterly (n = 4)

Calculation

r / n = 0.10 / 4 = 0.025 n × t = 4 × 5 = 20 compounding periods A = 100000 × (1.025)^20 = 100000 × 1.6386164 = 1,63,861.64 Interest = 1,63,861.64 − 1,00,000 = 63,861.64 Effective annual rate = (1.025)^4 − 1 = 10.38%

The deposit matures at ₹1,63,861.64, of which ₹63,861.64 is interest. Simple interest on the same deposit would have paid only ₹50,000, so quarterly reinvestment adds ₹13,861.64 — and the 10% nominal rate is worth an effective 10.38% a year.

What the result means

  • The maturity amount is what the account is worth on the last day of the term, assuming you never withdraw and the rate never changes.
  • Total interest is the portion you did not deposit. Watch how its share of the maturity amount climbs as you extend the term — beyond roughly fifteen years at typical rates, interest starts to exceed the original principal.
  • The effective annual rate is the honest basis for comparing two offers. A 10% quarterly account beats a 10.2% annual one, and only the effective rate makes that visible.
  • The figures are nominal and pre-tax. Interest income is generally taxable in the year it is credited, and inflation erodes what the final sum can actually buy, so treat the number as a gross illustration.

Related calculations

  • Hold the rate and term fixed and cycle through all four compounding frequencies to size the benefit of more frequent crediting.
  • Halve the principal but double the term to see which lever moves the maturity amount more at your rate.
  • Compare the compound total against the simple-interest figure to isolate exactly what reinvestment is contributing.

Frequently asked questions

What is the difference between compound and simple interest?

Simple interest is always calculated on the original principal, so it pays the same amount every year and grows in a straight line. Compound interest is calculated on the principal plus all interest credited so far, so each period starts from a bigger base and the curve steepens over time. Over one annually compounded year the two are identical; the gap widens with every additional period.

How does the compounding frequency change my returns?

More frequent compounding means interest joins your balance sooner and starts earning sooner, so a higher nominal rate is not automatically the better deal. At 10% on ₹1,00,000 for five years, annual compounding pays ₹61,051 while monthly compounding pays ₹64,531 — the same advertised rate, roughly ₹3,500 apart purely because of the crediting schedule.

What is the effective annual rate and why does it matter?

The effective annual rate converts any compounding schedule into the single yearly rate that would produce the same result, using (1 + r/n)^n − 1. It exists so you can compare products honestly: a 12% monthly-compounded scheme has an effective rate of 12.68%, which tells you immediately that it beats a 12.5% annually compounded alternative.

How long will it take my money to double?

The rule of 72 gives a quick estimate: divide 72 by the annual rate to get the approximate number of years. At 8% that is about nine years, at 12% about six. The approximation is accurate to within a few months for rates between roughly 5% and 15%, and you can check it exactly here by adjusting the term until the maturity amount reaches twice the principal.

Does this calculator account for tax on the interest?

No, every figure shown is gross of tax. In India, interest from deposits is generally added to your income and taxed at your slab rate in the year it is credited, and banks deduct TDS once interest crosses the applicable threshold. Your actual post-tax maturity value will therefore be lower than the amount displayed.

Can I use this if I add money to the account every month?

Not accurately. This model assumes a single deposit at the start with no further contributions or withdrawals, which is what the formula A = P(1 + r/n)^(nt) describes. For regular monthly contributions each instalment compounds for a different length of time, so you need the RD calculator for a fixed-rate deposit or the SIP calculator for a market-linked investment.

What happens if the interest rate is zero?

The maturity amount equals the principal and total interest is zero, because the growth factor (1 + 0/n) is exactly 1 no matter how many times it is applied. The calculator handles this cleanly rather than showing an error, which makes it useful as a baseline for seeing how much of a projected balance is attributable purely to interest.

Is compound interest always in my favour?

Only when you are the one earning it. The same mechanism works against you on credit card balances and other revolving debt, where unpaid interest is added to the outstanding amount and then charged interest itself — often compounded monthly at rates above 30% a year. The arithmetic is identical; only the direction of the cash flow changes.

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