What is the Compound Interest Calculator?
Compound interest is interest earned on both your original principal and the interest already accumulated — "interest on interest". Over long periods this produces exponential growth, which is why Einstein reputedly called it the eighth wonder of the world.
The compounding frequency matters: the more often interest is credited (yearly → quarterly → monthly → daily), the higher the effective yield for the same quoted rate. Banks in India typically compound FDs quarterly and savings accounts daily (credited quarterly).
Compound Interest Calculator Formula & How It Works
- A = Final amount
- P = Principal
- r = Annual interest rate (decimal)
- n = Compounding periods per year
- t = Time in years
The rate is divided across n periods per year and applied n×t times in total. A useful shortcut is the Rule of 72: divide 72 by the annual rate to estimate the years needed to double your money — at 8%, money doubles roughly every 9 years.
Worked Examples
₹1 lakh at 8% for 10 years, compounded yearly
The amount grows to ₹2,15,892 — your money more than doubles, earning ₹1,15,892 in interest.
Same deposit compounded monthly
Monthly compounding lifts the maturity value to ₹2,21,964 — about ₹6,000 more than yearly compounding at the same quoted rate.