💰 Finance & Math

Compound Interest Calculator

Q: What is compound interest?

Compound interest is interest calculated on both the initial principal and all previously accumulated interest. Unlike simple interest (which is only on the principal), compound interest causes investments to grow exponentially over time — often called 'interest on interest'.

Q: What is the compound interest formula?

A = P × (1 + r/n)^(n×t), where P = principal amount, r = annual interest rate (as a decimal), n = number of compounding periods per year, t = time in years. Total interest = A − P.

Q: What does compounding frequency mean?

Compounding frequency is how often interest is calculated and added to your balance. Options: Annually (1×/year), Semi-annually (2×), Quarterly (4×), Monthly (12×), Daily (365×). More frequent compounding = slightly higher effective return because each period's interest begins earning sooner.

Q: How much does ₹1 lakh grow at 8% for 10 years?

₹1,00,000 at 8% compounded annually for 10 years grows to ₹2,15,892. With monthly compounding at 8%, it grows to ₹2,21,964. The difference comes from more frequent compounding of accumulated interest.

Q: What is the difference between simple and compound interest?

Simple interest = P × r × t, calculated only on the original principal. Compound interest adds accumulated interest back to the principal each period, so you earn interest on interest. Over 20+ years, the difference is enormous.

Q: What is the Rule of 72?

The Rule of 72 estimates doubling time: divide 72 by the annual interest rate. At 6%, money doubles in ~12 years. At 8%, ~9 years. At 12%, ~6 years. It is a quick mental math shortcut for compound growth.

See exactly how your money grows with compound interest. Adjust principal, rate, time, and compounding frequency for an instant result.

Principal Amount (₹)

Annual Interest Rate (%)

Time Period (years)

Compounding Frequency

Results

Principal —

Total Interest —

Final Amount —

Effective Annual Rate —

Rule of 72 (doubles in) —

Principal Interest

Frequently Asked Questions

What is compound interest?

Compound interest is interest earned on both the principal and the accumulated interest. It causes exponential growth — the longer you invest, the faster it accelerates.

What is the compound interest formula?

A = P × (1 + r/n)^(n×t). P = principal, r = annual rate (decimal), n = compounding periods/year, t = years. Interest earned = A − P.

What does compounding frequency mean?

How often interest is added to your balance. Monthly (12×/year) earns slightly more than annual (1×/year) because each month's interest starts earning immediately.

How much does ₹1 lakh grow at 8% for 10 years?

₹1,00,000 at 8% compounded annually → ₹2,15,892. Monthly compounding at 8% → ₹2,21,964. More frequent compounding = higher effective yield.

What is the difference between simple and compound interest?

Simple interest only accrues on principal. Compound interest accrues on principal + all past interest. Over long periods the difference is dramatic.

What is the Rule of 72?

Divide 72 by the annual interest rate to estimate doubling time. At 8%: ~9 years. At 6%: ~12 years. At 12%: ~6 years. A handy mental math shortcut.

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