MyFinCards

Compound Interest Calculator

Compound interest is charged on the balance rather than the original principal, so each period earns on everything the previous ones added. How often that happens changes the answer, which is why the frequency is a control here and not an assumption. The simple-interest figure sits beside it for comparison. See the simple interest calculator.

SimpleCompound
₹1,00,000
₹1,000₹1,00,00,000
6%
1%50%
5 Yr
1 Yr30 Yr
Compounding Frequency
Principal amount₹1,00,000
Compound interest₹33,823
Total amount₹1,33,823

What the Total is Made Of

Total After 5 Years

₹1,33,823

On the same ₹1,00,000 at 6% for 5 years, simple interest pays ₹30,000 and compound interest pays ₹33,823 — a difference of ₹3,823. Simple interest keeps charging on the original ₹1,00,000 forever; compound interest charges on the balance, which is why the gap widens with every year rather than staying proportional. See the simple interest calculator.

Worked Example: ₹1,00,000 at 6% for 5 Years

Compound interest is P × (1 + R/n)^(n×T) = ₹1,00,000 × (1 + 6/100)5 = ₹1,33,823. Interest is added once a year, and from then on earns interest itself.

Principal

₹1,00,000

what you start with

Compound interest

₹33,823

on a rising balance

The other method

₹30,000

simple interest, same inputs

Which one applies to you is not a choice you make

It is set by the product. Indian bank FDs and RDs compound quarterly; most personal and car loans are quoted on a reducing balance, which is compounding; credit card revolving interest compounds monthly. A "flat rate" loan is the one that genuinely uses simple interest on the original amount — and it is almost always the more expensive of two offers quoting the same percentage.

What this Calculator Does

It applies P × (1 + R/n)n×T at the frequency you choose and shows that arithmetic rather than only its result. The simple-interest figure for the same principal, rate and term is computed alongside, because the difference between the two is what “the power of compounding” actually refers to.

How to Use It

1

Set the principal.

2

Set the annual rate and the term in years.

3

Choose how often interest is added — yearly, half yearly or quarterly.

4

Read the total, and the gap against simple interest in the note below.

Frequency Is Not Yours to Choose

It is set by the product. Indian bank FDs and RDs compound quarterly, PPF annually, credit card revolving interest monthly. Raising the frequency raises the yield, which is why a deposit's effective annual yield exceeds its advertised rate — and why a credit card's monthly rate is so much worse than the annual figure it implies.

Expert FAQ

Frequently Asked Questions

A = P × (1 + R/n)^(n×T), where P is the principal, R the annual rate as a decimal, n the number of times interest is added each year and T the term in years. The interest alone is A minus P.
Because interest added earlier starts earning sooner. On ₹1,00,000 at 6% over five years, yearly compounding gives ₹1,33,823, half-yearly ₹1,34,392 and quarterly ₹1,34,686. Same rate, same term — the difference is entirely when interest is credited.
Simple interest always charges on the original principal; compound interest charges on the balance. They are identical over exactly one compounding period, then diverge, and the gap grows faster the longer the term. On ₹1,00,000 at 6% the gap is nothing after one year, ₹3,823 after five and far more after twenty.
The yield once compounding is accounted for. A 6.5% rate compounded quarterly has an effective annual rate of 6.660%. When comparing two deposits with different compounding frequencies, the effective rate is the only fair comparison.
Fixed and recurring deposits compound quarterly. Savings accounts credit interest quarterly but calculate it on the daily balance. PPF compounds annually. Credit cards compound monthly on any revolved balance.
A shortcut: divide 72 by the rate to estimate the years for money to double. At 6% it gives 12 years against an exact 11.9. It is accurate enough for mental arithmetic between about 4% and 12%, and drifts at rates outside that.
Yes, and most retail loans in India compound. Credit card revolving interest at 3.5% a month is 42% a year once compounded — the most expensive consumer borrowing available. The same mechanism that builds a corpus destroys one.
Rarely in retail products. It is the mathematical limit as frequency rises, computed as P × e^(R×T), and it sets the ceiling on what frequency alone can add. The gap between quarterly and continuous is small, which is why no bank bothers.
No. The figure is nominal and pre-tax. A 7% deposit taxed at a 30% slab rate against 6% inflation is a real loss, even though the compound interest figure looks like a gain. Check the real return on the inflation calculator.
This calculator offers yearly, half-yearly and quarterly, which cover Indian deposit products. For monthly compounding of an investment return, the SIP calculator uses the monthly equivalent of an effective annual rate, which is the convention that applies to funds.