Compound Interest Calculator

Compound interest is calculated as A = P × (1 + r/n)^(n×t), where P is the principal, r is the annual interest rate (as a decimal), n is how many times per year interest compounds, and t is the time in years. The key difference from simple interest is that n — the compounding frequency — actually changes the result, not just the principal and rate.

Worked example: ₹1,00,000 at 7% annual interest for 5 years, compounded monthly (n = 12). That gives A = 100,000 × (1 + 0.07/12)^(12×5) ≈ ₹1,41,763 — about ₹41,763 in interest earned. Compounded annually instead (n = 1) over the same period, the same principal and rate would grow to only about ₹1,40,255 — a smaller but real difference purely from how often interest gets added to the balance.

More frequent compounding means interest starts earning its own interest sooner — monthly compounding adds interest to your balance 12 times a year instead of once, so each of those smaller additions has more time left in the year to compound further. The effect is modest at low rates and short time periods but becomes meaningful at higher rates or over many years, which is why the compounding frequency listed on a savings account or investment product is worth checking, not just the headline interest rate.

This is also the same underlying mathematics behind SIP Calculator's monthly-investment growth and Loan Calculator's interest accrual — compound interest is the single concept that connects savings growth, investment returns, and loan cost, just applied in different directions.