Calculate compound interest with different compounding frequencies
Compound interest is the addition of interest to the principal sum of a loan or deposit, or in other words, interest on interest. It is the result of reinvesting interest, rather than paying it out, so that interest in the next period is then earned on the principal sum plus previously accumulated interest.
A = P × (1 + r/n)^(n×t), where 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 years. For ₹1,00,000 at 10% compounded yearly for 5 years, A is about ₹1,61,051, so the interest is about ₹61,051.
More frequent compounding earns slightly more. For 100,000 at 10% for 5 years, yearly compounding gives about 161,051 and monthly gives about 164,531. The gap grows with higher rates and longer periods. This calculator lets you choose annual, bi-annual, quarterly, monthly or daily compounding.
The Rule of 72 is a quick estimate of how long money takes to double under compound interest: years to double ≈ 72 ÷ annual rate in percent. At 8%, it is about 9 years, and at 12%, about 6 years. It is an approximation, so use the calculator for exact projections.
Simple interest is earned only on the original principal, while compound interest is earned on the principal plus previously earned interest. For 100,000 at 10% over 5 years, simple interest gives 50,000 of interest but compound interest (yearly) gives about 61,051. The gap widens over time.
Yes. Besides the initial deposit, rate, years and compounding frequency, you can enter a monthly contribution and a tax rate on interest, which is deducted from each year's interest. It shows the final balance, total contributions, interest earned and tax paid, with a chart or year-by-year table view.
This calculator formats amounts in US dollars ($), but the maths is currency-neutral. If you use rupees, pounds or any other currency, read the figures in that currency, since the same numbers and percentages apply. Enter the rate in percent per year and choose the compounding that matches your account.
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A reducing interest rate means interest is charged only on the remaining outstanding principal balance at the end of each period, rather than the initial loan amount.