Compound Interest Calculator
Enter a principal, rate, period and compounding frequency to see how much interest accumulates and what the effective annual yield works out to.
Last updated
Compound interest earned
₹1,15,893
Total value: ₹2,15,893
Principal versus interest
- Principal: ₹1,00,000
- Interest: ₹1,15,893
- Principal
- ₹1,00,000
- Compound interest
- ₹1,15,893
- Total amount
- ₹2,15,893
- Effective annual yield
- 8%
- Extra over simple interest
- ₹35,893
Value at the end of each year
| Year | Value | Interest so far |
|---|---|---|
| 1 | ₹1,08,000 | ₹8,000 |
| 2 | ₹1,16,640 | ₹16,640 |
| 3 | ₹1,25,971 | ₹25,971 |
| 4 | ₹1,36,049 | ₹36,049 |
| 5 | ₹1,46,933 | ₹46,933 |
| 6 | ₹1,58,687 | ₹58,687 |
| 7 | ₹1,71,382 | ₹71,382 |
| 8 | ₹1,85,093 | ₹85,093 |
| 9 | ₹1,99,900 | ₹99,900 |
| 10 | ₹2,15,893 | ₹1,15,893 |
How this calculator works
Compound interest means the interest you earn starts earning interest of its own. Each period, the interest is added to the balance, and the next period’s interest is calculated on the larger figure.
The frequency of compounding matters more than people expect. The same 8% nominal rate produces 8% effective if compounded yearly, about 8.24% quarterly, and about 8.30% monthly. Over a long period, that small difference compounds into a meaningful gap.
What makes compounding powerful is time rather than rate. Money at 8% doubles in roughly nine years, quadruples in eighteen, and grows eightfold in twenty-seven. The last doubling adds as much as everything that came before it, which is why starting early beats contributing more later.
The same arithmetic works against you on debt. Credit card balances compound monthly at rates that make the outstanding amount grow alarmingly fast if only the minimum is paid.
The formula
Compound amount
A = P × (1 + r ÷ n)^(n × t)
- P
- Principal
- r
- Annual rate as a decimal
- n
- Compounding periods per year
- t
- Time in years
Effective annual rate
EAR = ((1 + r ÷ n)ⁿ − 1) × 100
The single number to compare when two products quote the same nominal rate but compound at different frequencies.
The rule of 72 — a quick mental check
Years to double ≈ 72 ÷ rate
At 8%, roughly nine years. It is an approximation, but close enough to sanity-check any projection in your head.
Worked example: ₹1 lakh at 8% for 10 years
Compare the same ₹1,00,000 at 8% for ten years at different compounding frequencies.
| Principal | ₹1,00,000 |
|---|---|
| Simple interest | ₹80,000 |
| Compounded yearly | ₹1,15,892 |
| Compounded quarterly | ₹1,20,804 |
| Compounded monthly | ₹1,21,939 |
| Effective yield, quarterly | 8.243% |
| Effective yield, monthly | 8.300% |
Compounding yearly earns ₹35,892 more than simple interest. Moving from yearly to monthly compounding adds a further ₹6,047 — on the same nominal rate, purely from how often the interest is credited.
Things worth knowing
- Always compare the effective annual yield, not the nominal rate, when two products compound differently.
- Compounding works identically against you on borrowings. Credit card debt compounds monthly at rates well above any deposit rate.
- Tax reduces the effective rate. Interest taxed at 30% turns an 8% deposit into roughly 5.6% after tax, which changes long projections considerably.
- Inflation reduces it further. A 7% return with 6% inflation leaves about 1% of real growth, which is the number that actually matters for buying power.
- The rule of 72 is a mental approximation and drifts at high rates. Use it to sanity-check, not to plan.
Frequently asked questions
What is the difference between simple and compound interest?
Does compounding frequency really matter?
What is the rule of 72?
How does inflation affect compound returns?
Sources
Every figure on this page is traceable to the official source below. If a source has changed since the date shown, please tell us and we will correct it.
- Reserve Bank of India · Last verified 9 August 2026
Lending norms, the external benchmark framework and the policy repo rate.