Compound Interest Calculator — CI Calculator with Deposits
Calculate compound interest with 5 compounding frequencies. Add regular deposits, compare CI vs SI, and see frequency comparison table. Free compound interest calculator India.
Compound Interest Calculator
Calculate CI with compounding
Compound Interest Results
Maturity Amount
₹1,48,985
Total Deposits
₹1,00,000
Interest Earned
₹48,985
Principal vs Interest
Compound vs Simple Interest
Compounding Frequency Impact
What is Compound Interest?
Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. It is "interest on interest" — making your money grow faster than simple interest.
Albert Einstein reportedly called compound interest the "eighth wonder of the world". The key is time — the longer your money compounds, the faster it grows exponentially.
Compound Interest Formula
A = P × (1 + r/n)nt
Where:
- A = Maturity amount
- P = Principal amount
- r = Annual interest rate (decimal)
- n = Compounding frequency per year
- t = Time in years
Compounding Frequency
Higher compounding frequency gives slightly higher returns because interest is calculated more often.
Common Compounding Frequencies
- Banks (Savings) — Daily or quarterly compounding
- Fixed Deposits — Quarterly compounding
- PPF — Yearly compounding
- Mutual Funds — Daily NAV-based (effectively daily)
- NSC — Yearly compounding
Power of Compounding
₹1 lakh at 8% for 30 years:
- Simple Interest: ₹3,40,000
- Compound (Yearly): ₹10,06,266
- Compound (Monthly): ₹10,93,573
Frequently Asked Questions
What is the difference between simple and compound interest?
Simple interest is calculated only on the principal amount. Compound interest is calculated on principal + accumulated interest. Over time, compound interest generates significantly more wealth. For example, ₹1 lakh at 10% for 20 years: SI = ₹3 lakh, CI = ₹6.73 lakh.
Which is better — monthly or quarterly compounding?
Monthly compounding is slightly better than quarterly as interest is calculated more frequently. However, the difference is minimal. For ₹1 lakh at 8% for 5 years: Monthly = ₹1,48,985, Quarterly = ₹1,48,595 — a difference of only ₹390.
Do banks use simple or compound interest?
Most banks in India use compound interest for savings accounts (daily/quarterly compounding) and fixed deposits (quarterly compounding). Home loans and personal loans typically use reducing balance (which is compound interest). Simple interest is rare in banking.
How does compound interest help in wealth creation?
Compound interest creates a snowball effect — your returns generate more returns. Starting early is key. ₹5,000/month SIP at 12% for 30 years grows to ₹1.76 crore, of which ₹18 lakh is invested and ₹1.58 crore is compound interest. Starting 10 years later gives only ₹50 lakh.
What is the Rule of 72?
The Rule of 72 is a quick way to estimate how long it takes to double your money. Divide 72 by the interest rate. At 8% interest, money doubles in ~9 years (72÷8). At 12%, it doubles in ~6 years. At 15%, in ~4.8 years.
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