Calculate how a principal amount grows with compound interest over time. Choose daily, monthly, quarterly, or yearly compounding and see the final amount, total interest, growth percentage, and a year-wise breakdown.
| Year | Amount | Interest This Year | Cumulative Interest |
|---|---|---|---|
| 1 | 108,000.00 | 8,000.00 | 8,000.00 |
| 2 | 116,640.00 | 8,640.00 | 16,640.00 |
| 3 | 125,971.20 | 9,331.20 | 25,971.20 |
| 4 | 136,048.90 | 10,077.70 | 36,048.90 |
| 5 | 146,932.81 | 10,883.91 | 46,932.81 |
| 6 | 158,687.43 | 11,754.62 | 58,687.43 |
| 7 | 171,382.43 | 12,694.99 | 71,382.43 |
| 8 | 185,093.02 | 13,710.59 | 85,093.02 |
| 9 | 199,900.46 | 14,807.44 | 99,900.46 |
| 10 | 215,892.50 | 15,992.04 | 115,892.50 |
Simple interest grows a principal amount by the same fixed rupee (or dollar) amount every period, since it's always calculated on the original, unchanging principal — a straight, linear line if you plotted it over time. Compound interest instead recalculates interest on the principal plus every bit of interest already earned so far, so each period's interest is added to an ever-growing base, producing a curve that starts out looking similar to simple interest but accelerates noticeably as time goes on. Over a short period, the two produce very similar results; over a long period, especially at a meaningful interest rate, compound interest produces substantially more total growth — this compounding gap is precisely why long-term savers and investors are so consistently advised to start early and let compounding run for as long as possible.
The formula this tool uses, A = P × (1 + r ÷ n)^(n × t), breaks down into intuitive pieces: (1 + r ÷ n) is the growth multiplier applied at every single compounding period, where r ÷ n is that period's small slice of the full annual rate. Raising that per-period multiplier to the power of (n × t) — the total number of compounding periods across the entire time span — captures the effect of that small multiplier being applied over and over, compounding on itself every single time. Multiplying by the principal P scales this pure growth factor into an actual final amount. This structure is exactly why increasing either the compounding frequency (n) or the time period (t) increases the exponent, and why exponential growth accelerates rather than simply following a straight line, as either input grows.
Compounding frequency determines how often interest is calculated and added to the principal within each year — yearly compounding does this once, quarterly four times, monthly twelve times, and daily 365 times. At an identical stated annual rate, more frequent compounding always produces a slightly higher final amount, since interest starts earning its own interest sooner and more often. The size of this effect follows a pattern of diminishing returns: moving from yearly to monthly compounding typically produces a more noticeable jump in final amount than moving from monthly to daily, since the marginal benefit of adding even more compounding periods per year shrinks as the periods get shorter. This is also why comparing only the headline interest rate across two savings or investment products can be misleading — the actual compounding frequency behind that rate matters too, and the true, comparable figure is each product's effective annual yield after accounting for its specific compounding frequency.
The year-wise table exists specifically to make compounding's acceleration visible rather than abstract: watch the 'interest this year' column, and you'll see it grow larger in every successive row, even though neither the principal nor the interest rate ever changes across the whole table. This happens because each year's interest is calculated on an ever-larger accumulated amount than the year before — the same underlying mechanism, playing out one row at a time. Comparing the cumulative interest column against the original principal across different rows also shows how much of the eventual total growth happens in the later years of a long time horizon, reinforcing why extending the investment period, even modestly, tends to have an outsized effect on the final outcome.
This kind of calculation applies directly to comparing savings accounts, fixed or recurring deposits, and bonds that advertise a stated annual rate and a specific compounding frequency — plugging in the real numbers from a specific offer lets you see the actual final amount you'd end up with, rather than relying on the headline rate alone. It's also useful for basic financial planning: estimating how a one-time lump sum (an inheritance, a bonus, a settlement) might grow if left untouched for a specific number of years, or for understanding, in reverse, how compound interest works against you on debt that compounds unpaid interest, such as certain types of loans or credit balances. If you're specifically looking to model regular ongoing contributions rather than a single lump sum, the related SIP Calculator handles that scenario instead.
Compound Interest Calculator projects growth on a single lump-sum principal. These related calculators cover other common savings and investment scenarios.