How to use the Compound Interest Calculator
- 1. Enter the principalType the amount, yearly rate and time.
- 2. Pick compoundingChoose how often interest is added to the principal.
- 3. See the growthGet the final amount, the interest and a year-by-year table.
The compound interest formula
A = P × (1 + r/n)^(n × t)
P is the principal. r is the yearly rate as a decimal. n is how many times a year interest is added. t is time in years. The interest alone is A minus P.
Worked example: ₹1,00,000 at 8% for 5 years, compounded quarterly. Each quarter earns 2%, and there are 20 quarters. So A = 1,00,000 × 1.02^20 = ₹1,48,595. Your compound interest is ₹48,595.
Simple interest on the same numbers is ₹40,000. So compounding adds ₹8,595 here, because interest also earns interest.
Does compounding more often matter?
Yes, but less than most people think. That 8% quarterly gives an effective yearly rate of 8.24%, not 8%. Daily compounding only adds a little more. Rate and time matter far more than frequency, so switch the options to see this for yourself. The biggest lever is simply staying invested for longer.
A handy check is the doubling time, also shown in your result. It tells you how many years your money takes to double at your chosen rate. A rough shortcut is the Rule of 72: divide 72 by the rate. At 8% that gives about 9 years, close to the exact figure.
Where you will meet it
Fixed deposits, recurring deposits and PPF all use compounding, and so do many loans, where it works against you. For a specific product, use the FD calculator or the PPF calculator, since those follow their own rules. To see the difference on a loan or a basic exam sum, try the simple interest calculator.
Frequently asked questions
What is the difference between compound and simple interest?
Simple interest is paid only on the original amount. Compound interest is also paid on interest already added, so it grows faster with time.
Which compounding option should I use?
Use whatever your bank or product states. Many Indian bank deposits compound quarterly, so that is the default here.
Can I use this for exam questions?
Yes. Pick the compounding period from the question and enter part years as decimals, like 2.5.
Is the compound interest calculator free?
Yes. You enter your name and WhatsApp number once to see your result, and all other Uncodemy tools then open without the form.