Compound Interest Calculator

Principal Amount
₹
Rate of interest (p.a)
%
Time Period
Years
Principal Amount: ₹6,00,000
Total Interest: ₹5,61,695
Total Amount: ₹11,61,695

Compound Interest Calculator

Compound interest is a method of calculating interest where the interest earned on an investment is added back to the principal amount, so that interest is calculated on both the initial amount and the accumulated interest from previous periods. This makes compound interest more beneficial than simple interest, especially for long-term investments.

Our Compound Interest Calculator allows you to easily calculate how much interest you will earn or owe over a period of time, factoring in the effect of compounding. Whether you're investing in a savings account, fixed deposit, or loan.

How Does Compound Interest Work?

Compound interest is calculated using the following formula:

Compound Interest (CI) = P × (1 + r/n)^(nt) - P

Where:

  • P = Principal amount (the initial investment or loan amount)
  • r = Annual interest rate (as a decimal)
  • n = Number of times the interest is compounded per year
  • t = Time (in years)

The Compound Interest Calculator helps you calculate the interest earned or owed over a specified period, with the added benefit of compounding. Just enter the principal, rate, time, and the number of compounding periods per year, and the calculator will give you the total compound interest.

Why Use a Compound Interest Calculator?

  • Accurate Calculations: The calculator uses the standard compound interest formula to ensure accurate results.
  • Easy to Use: Simply input your principal, interest rate, compounding frequency, and duration, and let the calculator do the rest.
  • Save Time: Forget about complex formulas or manual calculations. Our tool gives you results instantly.
  • Financial Planning: By understanding how compound interest works, you can make smarter financial decisions, whether you're investing or taking out a loan.

Benefits of Using Compound Interest

  • Faster Growth of Investments: Compound interest allows your money to grow faster compared to simple interest, as interest is calculated on both the principal and the accumulated interest.
  • More Returns Over Time: The longer your investment stays, the greater the impact of compounding, resulting in more significant returns.
  • Reinvesting Earnings: Compound interest encourages the reinvestment of earnings, further enhancing your investment’s value.
  • Ideal for Long-Term Investments: Compound interest is particularly effective for long-term investments like retirement funds, stocks, or fixed deposits.

Difference Between Simple Interest and Compound Interest

Simple interest is calculated only on the principal amount, meaning you earn or pay interest on the original investment or loan amount throughout the entire period. In contrast, compound interest is calculated on both the principal and the accumulated interest, which means the interest itself earns interest over time, resulting in higher returns or payments. Essentially, compound interest leads to faster growth of investments compared to simple interest, especially over longer periods.

FAQs

The Compound Interest Calculator helps estimate the future value of your investment or savings based on the principal amount, interest rate, compounding frequency, and investment duration.
Compound interest is the interest calculated on the initial principal and also on the accumulated interest from previous periods. It helps grow investments faster compared to simple interest.
Interest can be compounded on a daily, monthly, quarterly, semi-annual, or annual basis. The more frequently it is compounded, the higher the total returns.
The power of compounding allows your savings to grow exponentially over time. The earlier you start investing, the more significant the impact of compounding.
Yes, you can use the Compound Interest Calculator to estimate loan interest if the loan follows a compound interest formula instead of simple interest.