See exactly how compound interest grows your money over time. Enter your initial investment, interest rate, time period, and compounding frequency to see your maturity value and total interest earned.
How Compound Interest Is Calculated
The formula is: A = P × (1 + r/n)^(n×t), where P is your principal, r is the annual interest rate, n is how many times per year interest compounds, and t is the time in years. More frequent compounding (monthly vs. annually) means slightly faster growth for the same rate.
Why Compounding Frequency Matters
Switch the compounding frequency above between annual, quarterly, and monthly on the same principal and rate — you’ll see the maturity value change even though the stated interest rate is identical. This is why the fine print on fixed deposits and recurring deposits matters as much as the headline rate.
Frequently Asked Questions
What’s the difference between compound interest and simple interest?
Simple interest is calculated only on your original principal every period. Compound interest is calculated on your principal plus all previously earned interest, which is why it grows faster over long periods.
Where does compound interest apply in India?
Fixed deposits, recurring deposits, PPF, and most mutual fund/equity returns all compound. Savings account interest, by contrast, is usually calculated daily but paid quarterly — check your bank’s specific method.
Is compound interest always better for the investor?
Yes when you’re earning it (investments, deposits). It works against you the same way on debt — credit card interest compounds too, which is exactly why credit card debt grows so fast if left unpaid.