Compound Interest Calculator
Work out what a lump sum grows to with compound interest, and see how much more it earns than simple interest.
Researched by Mirza Seraj BaigFacts last checked against official sources on 7 September 2026How often interest is added to the principal. More frequent compounding gives a slightly higher return.
Maturity amount
₹2,20,804
≈ 2.21 lakh
- Principal
- 45%
- Interest
- 55%
- Principal
- ₹1,00,000
- Compound interest
- ₹1,20,804
- Simple interest would be
- ₹80,000
- Gain from compounding
- ₹40,804
What is compound interest?
Compound interest is interest earned on interest. Each time interest is added to the balance, the next period's interest is calculated on that larger amount, so money grows faster the longer it stays invested.
How often interest is added — yearly, quarterly or monthly — is the compounding frequency. PPF and Sukanya Samriddhi compound yearly; post office recurring deposits and most bank fixed deposits compound quarterly.
How is Compound Interest calculated?
A = P × (1 + r ÷ n)^(n × t), where P is the principal, r the annual interest rate as a decimal, n the number of times interest is compounded per year, and t the number of years. The compound interest earned is A − P.
Compound interest example: ₹1 lakh at 8% for 10 years
Invest ₹1,00,000 at 8% a year, compounded quarterly, for 10 years. A = 1,00,000 × (1 + 0.08 ÷ 4)^(4 × 10) = ₹2,20,804, so the interest earned is ₹1,20,804.
Simple interest on the same money would be ₹80,000. Compounding adds ₹40,804 on top, without a rupee more invested.
₹1 lakh at 8% for 10 years, by compounding frequency
The same money, the same rate and the same ten years; only how often interest is added changes.
| Compounded | Maturity amount | Interest earned | More than simple interest |
|---|---|---|---|
| Yearly | ₹2,15,892 | ₹1,15,892 | ₹35,892 |
| Half-yearly | ₹2,19,112 | ₹1,19,112 | ₹39,112 |
| Quarterly | ₹2,20,804 | ₹1,20,804 | ₹40,804 |
| Monthly | ₹2,21,964 | ₹1,21,964 | ₹41,964 |
| Daily | ₹2,22,535 | ₹1,22,535 | ₹42,535 |
Frequently asked questions
What is the compound interest formula?
A = P × (1 + r ÷ n)^(n × t). P is the principal, r the annual rate as a decimal, n how many times a year interest is compounded, and t the time in years. Subtract the principal from A to get the interest earned.
How is compound interest different from simple interest?
Simple interest is calculated only on the original principal. Compound interest is calculated on the principal plus the interest already added, so the balance grows faster over time. This calculator shows both so you can see the difference.
Does compounding frequency matter?
Yes, though less than most people expect. For the same annual rate, quarterly compounding beats yearly, and monthly beats quarterly — but the gap narrows quickly. The rate and the time period matter far more than the frequency.
Which Indian schemes use compound interest?
PPF and Sukanya Samriddhi compound annually, post office recurring deposits compound quarterly, and most bank fixed deposits compound quarterly. Each has its own dedicated calculator on this site.
How long does it take to double money at 8%?
About 9.0 years with yearly compounding. The "rule of 72" gives a quick estimate: 72 ÷ 8 = 9 years.
What does ₹1 lakh grow to at 8% for 10 years?
₹2,20,804 with quarterly compounding, or ₹2,15,892 with yearly compounding.