Compound Interest Calculator
Quick answer: Compound interest is interest earned on both your original money and the interest already added. ₹1,00,000 at 8% a year, compounded yearly for 10 years, grows to about ₹2,15,893. Enter principal, rate, time and compounding frequency to see your balance.
Use the Compound Interest Calculator
Compound Interest formula and what each symbol means
A = P × (1 + r ÷ n)^(n × t), where P is principal, r the annual rate as a decimal, n compounding periods per year and t years.
| Symbol | Meaning |
|---|---|
| P | Starting amount |
| r | Annual interest rate (decimal) |
| n | Times compounded per year |
| t | Years |
Compound Interest examples
India
P = ₹1,00,000, r = 8%, n = 1, t = 10. A = 1,00,000 × 1.08^10 = about ₹2,15,893. Interest earned is about ₹1,15,893.
US
P = $10,000, r = 5%, compounded monthly (n = 12), t = 10. A = 10,000 × (1 + 0.05/12)^120 = about $16,470.
How to calculate Compound Interest step by step
- Write the rate as a decimal.
- Divide it by the number of periods per year.
- Raise (1 + that figure) to the power n × t.
- Multiply by the principal.
How to read your Compound Interest result
More frequent compounding gives slightly more interest, but time and rate matter far more than frequency.
Common mistakes when calculating Compound Interest
- Using the rate as a percent (8) instead of a decimal (0.08).
- Forgetting that deposits or taxes change the result.
- Comparing nominal rates without checking compounding.
Compound Interest FAQ
What is the compound interest formula?
A = P(1 + r/n)^(nt). A is the final amount, P the principal, r the annual rate, n compounds per year and t the years.
Is monthly or yearly compounding better?
Monthly gives a little more at the same stated rate. At 5% for 10 years on $10,000, monthly compounding earns about $180 more than yearly.
How is compound interest different from simple interest?
Simple interest is only on the principal. Compound interest also earns interest on past interest, so growth speeds up over time.
How long does money take to double?
A quick guide is the rule of 72: divide 72 by the annual rate. At 8% it takes about 9 years.
Method, review and disclaimer
Edited by: Hemant Kumar and Anjita Rai, founders of ToolsVault (SEO and content professional, not a licensed adviser). Method: this tool runs in your browser using the formula shown on this page; the numbers you enter are not sent to our servers.
Disclaimer: Illustration only. Real returns vary and are not guaranteed.