Compound interest is interest calculated not just on your original principal but also on the interest already earned, which is why the same principal and rate can produce very different outcomes depending on how often interest compounds. This calculator lets you choose the compounding frequency — annual, half-yearly, quarterly, monthly or daily — to match the specific instrument you’re evaluating.
Enter the principal amount, annual interest rate, time period and compounding frequency to see the interest earned and final maturity value.
Compound Interest Calculator
Calculate compound interest with annual, quarterly, monthly or daily compounding.
Formula used: A = P(1 + r/n)^(n×t). Choose the compounding frequency that matches your instrument (e.g. quarterly for most bank FDs, annually for PPF).
The compound interest formula
A = P(1 + r/n)^(n×t), where A is the final amount, P is the principal, r is the annual interest rate (as a decimal), n is the number of times interest compounds per year, and t is the time in years. More frequent compounding (say, monthly instead of annually) produces a slightly higher final value for the same nominal rate, because interest starts earning interest sooner.
Where different compounding frequencies apply
Bank fixed deposits in India typically compound quarterly, PPF compounds annually, and some savings accounts compound interest daily but credit it quarterly. Knowing the compounding frequency your specific instrument uses helps you compare the true effective annual yield across products, rather than just comparing the nominal interest rates.
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Frequently asked questions
What’s the difference between simple and compound interest?
Simple interest is calculated only on the original principal throughout the period. Compound interest is calculated on the principal plus any interest already accumulated, so it grows faster over time, especially over longer periods.
Which compounding frequency gives the highest returns?
For the same nominal annual rate, more frequent compounding (daily > monthly > quarterly > annually) produces a slightly higher final value, since interest is added to the principal more often.
Does this calculator work for loans too?
This calculator shows growth of an investment under compound interest. For loan EMIs, which use reducing-balance amortisation, use our dedicated EMI / Loan Calculator instead.