Compound Interest Calculator
Calculate compound interest (and compare it with simple interest) for any principal, rate and tenure.
Maturity Amount
₹1,46,933
Total Interest
₹46,933
How the Compound Interest Calculator works
Reviewed by Dinesh Babu · Last updated July 2026
Compound interest means you earn interest not just on your original principal but also on the interest already added — so your money accelerates over time instead of growing in a straight line. This calculator shows the maturity amount and interest earned for any principal, rate, tenure and compounding frequency, and sets it side by side with simple interest so you can see the gap.
The engine is one formula: A = P(1 + r/n)^(nt). The more often interest is added to the balance (the higher n), the more you earn, because each fresh chunk of interest starts earning interest sooner. This is why the same rate can produce different results depending on whether it compounds yearly, quarterly or monthly.
Compounding is the single most powerful idea in personal finance, and its magic is time. The longer the money stays invested, the more dramatic the effect — which is why starting early beats investing large amounts late.
Compound vs simple interest
Compound: A = P × (1 + r/n)^(n×t) · Simple: A = P × (1 + r×t)
P = principal, r = annual rate (as a decimal), n = times compounded per year, t = years.
The role of time (the eighth wonder)
Compounding is slow at first and then startling. In the early years the interest-on-interest is small, so compound and simple interest look similar. The gap widens with every passing year because the base that earns interest keeps getting bigger.
Consider ₹1,00,000 at 10%: it takes about 7.2 years to double once, but only another 7.2 years to double again to ₹4,00,000, and so on. Each doubling adds far more rupees than the last. This is why a 20-year horizon is worth so much more than a 10-year one.
The Rule of 72 — a quick mental shortcut
To estimate how long money takes to double, divide 72 by the annual rate. At 8%, that is 72 ÷ 8 = 9 years; at 12%, about 6 years. It is an approximation, not exact, but it is close enough to reason about investments in your head without a calculator.
| Years | Simple interest total | Compound total |
|---|---|---|
| 5 | ₹1,50,000 | ₹1,61,051 |
| 10 | ₹2,00,000 | ₹2,59,374 |
| 20 | ₹3,00,000 | ₹6,72,750 |
| 30 | ₹4,00,000 | ₹17,44,940 |
Compound vs simple over 10 years
₹1,00,000 at 8% for 10 years. Simple interest: 1,00,000 × (1 + 0.08 × 10) = ₹1,80,000. Compound (yearly): 1,00,000 × 1.08^10 ≈ ₹2,15,900. The compounding advantage — about ₹35,900 — comes entirely from interest earning interest.
Why frequency matters
₹1,00,000 at 8% for 10 years, compounded quarterly: 1,00,000 × (1 + 0.08/4)^(4×10) = 1,00,000 × 1.02^40 ≈ ₹2,20,800 — roughly ₹4,900 more than yearly compounding, from nothing but adding interest four times a year instead of once.
Common mistakes to avoid
- Confusing the annual rate with the effective rate. 12% compounded monthly is an effective ~12.68% per year — the headline rate understates what you actually earn.
- Underestimating time. People focus on the rate, but doubling the years usually matters more than a small bump in rate.
- Ignoring taxes and inflation. Your real (inflation-adjusted, post-tax) compound return is what preserves purchasing power, and it is often much lower than the nominal figure.
- Assuming compounding is always in your favour. On loans and credit-card balances, compound interest works against you just as powerfully.
Frequently asked questions
What is the difference between simple and compound interest?+
Simple interest is calculated only on the original principal, so it grows in a straight line. Compound interest is calculated on the principal plus all the interest added so far, so it accelerates. Over long periods the difference is enormous — this calculator shows both side by side.
How does compounding frequency affect returns?+
The more often interest is added — monthly rather than yearly — the more you earn, because each bit of interest starts earning its own interest sooner. The effect is real but modest: at 8%, moving from yearly to quarterly compounding over 10 years adds only a few thousand rupees per lakh.
What is the effective annual rate?+
It is the true yearly return once compounding is accounted for. A 12% nominal rate compounded monthly gives an effective rate of (1 + 0.12/12)^12 − 1 ≈ 12.68%. When comparing products, compare effective rates, not headline rates.
What is the Rule of 72?+
A shortcut to estimate doubling time: divide 72 by the annual interest rate. At 9% your money roughly doubles in 72 ÷ 9 = 8 years. It is approximate but handy for quick mental maths.
Where is compound interest used in India?+
Almost everywhere your money grows or a debt accrues — FDs, RDs, PPF, NSC, mutual funds (effectively), and on the other side, home loans, personal loans and credit-card dues. Understanding it helps on both sides of the balance sheet.
Does compound interest keep up with inflation?+
Only if the rate beats inflation. Your real return is roughly the nominal rate minus inflation, and after tax it can be lower still. Money in a low-interest account can lose purchasing power even while the rupee balance grows.
Why do people say to start investing early?+
Because compounding rewards time more than amount. Money invested in your twenties has decades to double repeatedly, so a modest early investment often ends up larger than a much bigger investment started years later.