Compound Interest Calculator

With simple interest, you earn interest only on your original deposit. With compound interest, the interest you earn is added to the principal, and future interest is calculated on this larger amount. The result is exponential rather than linear growth. A deposit of 1,00,000 at 7% simple interest earns 70,000 over ten years; the same deposit compounded yearly earns about 96,715 — nearly 40% more — and the gap widens every year the money stays invested.

The calculator uses the standard compound interest formula:

A = P × (1 + r/n)^(n × t)

Where A is the maturity amount, P is the principal, r is the annual rate as a decimal, n is the number of compounding periods per year, and t is the time in years. Fixed deposits in India typically compound quarterly, savings accounts daily or quarterly, and many bonds annually — which is why the compounding frequency option matters.

The more frequently interest is compounded, the more you earn, because interest starts earning interest sooner. On 1,00,000 at 7% for 10 years, annual compounding yields about 1,96,715, quarterly compounding about 2,00,160, and monthly compounding about 2,00,966. The differences look small over short periods but become meaningful over decades or with large principals. When comparing deposits or bonds, always check both the quoted rate and the compounding frequency — a slightly lower rate with more frequent compounding can sometimes beat a higher rate compounded annually.

A useful mental shortcut is the Rule of 72: divide 72 by the annual interest rate to estimate how many years it takes for money to double. At 7%, money doubles roughly every 10.3 years; at 12%, every 6 years. This is why starting to save early matters far more than the exact amount you start with.