Compound Interest Calculator (2026) – CI Formula, Examples & Year-wise Table
See how your principal grows each year through compounding. Notice how the interest earned increases each year — that is the power of compound interest.
| Year | Opening Balance | Interest Earned | Closing Balance | Total CI Earned | SI (same period) |
|---|
What is Compound Interest & How to Use This Calculator
Compound Interest (CI) is interest calculated not just on the original principal but also on all previously accumulated interest. In simple terms — your interest earns interest. This creates an exponential growth effect that becomes dramatically more powerful over longer time periods. Albert Einstein is often credited with calling compound interest the “eighth wonder of the world,” though the quote is disputed, the math behind it is undeniable.
The key difference between simple interest and compound interest is that in simple interest, only the original principal earns interest throughout the tenure. In compound interest, the interest earned each period is added to the principal, and the next period’s interest is calculated on this larger balance. Over long periods, this snowball effect creates significantly more wealth than simple interest.
How to Use This Calculator
- Compounding Frequency: Select how often interest is compounded — Daily (365x), Monthly (12x), Quarterly (4x), Half-Yearly (2x), or Annually (1x). More frequent compounding = more interest earned.
- Principal Amount: The initial amount you are investing or borrowing. Enter between ₹1,000 and ₹1 crore.
- Annual Interest Rate: The nominal annual interest rate (% p.a.). Most Indian bank FDs offer 6.5%–8.5% p.a. for quarterly compounding.
- Time Period: Duration of investment or loan in years. The longer the period, the more dramatic the compounding effect.
- Click Calculate CI: Get maturity amount, total interest earned, comparison with simple interest, effective annual rate, and a complete year-wise growth table.
Compound Interest Formula Explained with Examples
The compound interest formula is the cornerstone of finance — it is used to calculate returns on fixed deposits, recurring deposits, PPF, NSC, and the growth of any investment where interest is reinvested.
Standard Compound Interest Formula
A = Maturity Amount (Principal + Interest)
P = Principal (original amount)
r = Annual interest rate in decimal (e.g. 10% = 0.10)
n = Number of times interest is compounded per year
t = Time in years
Compound Interest (CI) = A – P
Example 1: ₹1,00,000 at 10% p.a., Quarterly compounding, 5 years
A = 1,00,000 × (1 + 0.10/4)^(4×5) = 1,00,000 × (1.025)^20 = ₹1,63,862
CI = ₹1,63,862 – ₹1,00,000 = ₹63,862
Monthly Compounding Formula
Example 2: ₹1,00,000 at 12% p.a., Monthly compounding, 3 years
A = 1,00,000 × (1 + 0.12/12)^(12×3) = 1,00,000 × (1.01)^36
A = 1,00,000 × 1.43077 = ₹1,43,077
CI = ₹43,077 | SI (same period) = ₹36,000
Effective Annual Rate (EAR)
The Effective Annual Rate shows the actual yearly return when compounding is more frequent than annual. It helps compare investments with different compounding frequencies on an equal basis.
Example: 10% p.a. with quarterly compounding
EAR = (1 + 0.10/4)^4 – 1 = (1.025)^4 – 1 = 0.1038 = 10.38%
This means 10% quarterly compounding gives the same result as 10.38% annual simple interest.
Impact of Compounding Frequency on Returns
All else being equal, more frequent compounding gives higher returns. The difference increases significantly over longer periods and higher interest rates. Here is a concrete comparison of how compounding frequency affects the same investment.
₹1,00,000 at 10% p.a. for 5 Years – Different Frequencies
| Compounding Frequency | n (times/year) | Maturity Amount | Interest Earned | Effective Annual Rate |
|---|---|---|---|---|
| Annual | 1 | ₹1,61,051 | ₹61,051 | 10.00% |
| Half-Yearly | 2 | ₹1,62,889 | ₹62,889 | 10.25% |
| Quarterly | 4 | ₹1,63,862 | ₹63,862 | 10.38% |
| Monthly | 12 | ₹1,64,531 | ₹64,531 | 10.47% |
| Daily | 365 | ₹1,64,861 | ₹64,861 | 10.52% |
₹1,00,000 at 10% p.a. for 20 Years – Frequency Impact Magnified
| Compounding | Maturity Amount | Total Interest | vs Annual |
|---|---|---|---|
| Annual | ₹6,72,750 | ₹5,72,750 | – |
| Half-Yearly | ₹6,85,064 | ₹5,85,064 | +₹12,314 |
| Quarterly | ₹6,91,861 | ₹5,91,861 | +₹19,111 |
| Monthly | ₹6,96,769 | ₹5,96,769 | +₹24,019 |
| Daily | ₹7,38,906 | ₹6,38,906 | +₹66,156 |
*All calculations at 10% p.a. nominal rate. Over 20 years, daily compounding earns ₹66,156 more than annual compounding — purely due to higher compounding frequency, same rate.
Compound Interest Ready Reference Tables
Use these tables to quickly check the maturity amount for common principal amounts at different interest rates and time periods, without using the calculator.
Quarterly Compounding – Maturity Amount for ₹1 Lakh Principal
| Rate (p.a.) | 1 Year | 2 Years | 3 Years | 5 Years | 10 Years | 15 Years |
|---|---|---|---|---|---|---|
| 6% | ₹1,06,136 | ₹1,12,649 | ₹1,19,562 | ₹1,34,686 | ₹1,81,402 | ₹2,44,322 |
| 7% | ₹1,07,186 | ₹1,14,888 | ₹1,23,144 | ₹1,41,478 | ₹2,00,160 | ₹2,83,182 |
| 7.5% | ₹1,07,714 | ₹1,16,015 | ₹1,24,929 | ₹1,44,995 | ₹2,10,232 | ₹3,04,800 |
| 8% | ₹1,08,243 | ₹1,17,166 | ₹1,26,824 | ₹1,48,594 | ₹2,20,804 | ₹3,28,103 |
| 9% | ₹1,09,308 | ₹1,19,486 | ₹1,30,696 | ₹1,56,308 | ₹2,44,322 | ₹3,82,234 |
| 10% | ₹1,10,381 | ₹1,21,840 | ₹1,34,489 | ₹1,63,862 | ₹2,68,506 | ₹4,39,980 |
| 12% | ₹1,12,551 | ₹1,26,677 | ₹1,42,576 | ₹1,80,611 | ₹3,26,204 | ₹5,89,160 |
Compound Interest on Different Principal Amounts at 8% p.a. (Quarterly) – 5 Years
| Principal | Maturity Amount | Interest Earned | SI (same period) | Extra via CI |
|---|---|---|---|---|
| ₹10,000 | ₹14,859 | ₹4,859 | ₹4,000 | ₹859 |
| ₹25,000 | ₹37,149 | ₹12,149 | ₹10,000 | ₹2,149 |
| ₹50,000 | ₹74,297 | ₹24,297 | ₹20,000 | ₹4,297 |
| ₹1,00,000 | ₹1,48,594 | ₹48,594 | ₹40,000 | ₹8,594 |
| ₹5,00,000 | ₹7,42,970 | ₹2,42,970 | ₹2,00,000 | ₹42,970 |
| ₹10,00,000 | ₹14,85,940 | ₹4,85,940 | ₹4,00,000 | ₹85,940 |
Simple Interest vs Compound Interest – Complete Comparison
Understanding the difference between simple and compound interest is fundamental to making good financial decisions — whether you are investing, taking a loan, or evaluating a financial product.
Formula Comparison
| Feature | Simple Interest (SI) | Compound Interest (CI) |
|---|---|---|
| Formula | SI = P × r × t | A = P × (1 + r/n)^(n×t) |
| Interest Basis | Always on original principal only | On principal + accumulated interest |
| Growth Pattern | Linear (straight line) | Exponential (curve, accelerates over time) |
| Short-term (1–2 years) | Very similar to CI | Slightly higher than SI |
| Long-term (10+ years) | Much lower returns | Significantly higher returns |
| Where Used | Vehicle loans (flat rate), some personal loans | FD, RD, PPF, NSC, home loans (reducing balance) |
Numerical Comparison: ₹1,00,000 at 10% p.a.
| Years | Simple Interest (SI) | Compound Interest (CI Annual) | CI Quarterly | Advantage of CI over SI |
|---|---|---|---|---|
| 1 | ₹1,10,000 | ₹1,10,000 | ₹1,10,381 | ₹381 |
| 3 | ₹1,30,000 | ₹1,33,100 | ₹1,34,489 | ₹4,489 |
| 5 | ₹1,50,000 | ₹1,61,051 | ₹1,63,862 | ₹13,862 |
| 10 | ₹2,00,000 | ₹2,59,374 | ₹2,68,506 | ₹68,506 |
| 20 | ₹3,00,000 | ₹6,72,750 | ₹6,91,861 | ₹3,91,861 |
| 30 | ₹4,00,000 | ₹17,44,940 | ₹18,11,362 | ₹14,11,362 |
When is Simple Interest Used in India?
Simple interest is relatively rare in formal banking and finance. It appears in: (1) Flat rate vehicle loans from some dealers — these appear to have a lower rate but the effective reducing balance rate is nearly double; (2) Pawn shop loans and informal lending; (3) Some short-term corporate loans. Always check whether a loan uses flat rate or reducing balance — the difference can be enormous. A 5% flat rate vehicle loan has an effective reducing balance cost of approximately 9%–10% p.a.
Rule of 72 – How Fast Does Your Money Double?
The Rule of 72 is a simple mental math shortcut that tells you approximately how many years it takes to double your money at a given compound interest rate. Divide 72 by the annual interest rate to get the approximate doubling time.
Examples:
At 6% p.a.: Money doubles in 72 ÷ 6 = 12 years
At 8% p.a.: Money doubles in 72 ÷ 8 = 9 years
At 9% p.a.: Money doubles in 72 ÷ 9 = 8 years
At 12% p.a.: Money doubles in 72 ÷ 12 = 6 years
At 15% p.a.: Money doubles in 72 ÷ 15 = 4.8 years
At 18% p.a.: Money doubles in 72 ÷ 18 = 4 years
Doubling Time for Common Indian Investments
| Investment | Typical Rate | Years to Double (Rule of 72) | Actual Years |
|---|---|---|---|
| Post Office RD (5 yr) | 6.70% p.a. | ~10.7 years | ~10.9 years |
| PPF | 7.10% p.a. | ~10.1 years | ~10.2 years |
| Bank FD (SBI) | 7.25% p.a. | ~9.9 years | ~9.9 years |
| Bank FD (Small Finance Bank) | 8.50% p.a. | ~8.5 years | ~8.5 years |
| Nifty 50 Index Fund (hist.) | ~12% p.a. (CAGR) | ~6 years | ~6 years |
| Mid-cap Equity Fund (hist.) | ~15% p.a. (CAGR) | ~4.8 years | ~4.9 years |
*Investment returns are historical estimates. Equity returns are market-linked and not guaranteed. FD/PPF/RD rates are current as of April 2026 and subject to change.
Which Indian Investments Use Compound Interest?
Understanding how compounding works in different Indian investment instruments helps you make smarter choices. Here is a complete breakdown:
1. Fixed Deposits (FD) – Quarterly Compounding
Bank FDs in India compound interest quarterly. The interest is calculated every quarter and added to the principal for the next quarter’s calculation. This is why the effective yield is slightly higher than the stated rate. For example, SBI’s 7.25% p.a. FD has an effective annual yield of approximately 7.45% when compounded quarterly. Senior citizens typically get 0.25%–0.50% extra on FD rates.
2. PPF (Public Provident Fund) – Annual Compounding
PPF compounds annually at the rate declared by the Government (currently 7.10% p.a. for FY 2026). However, the interest is calculated monthly on the lowest balance between the 5th and last day of each month, but credited annually. This means deposits made before the 5th of each month earn interest for that month. The 15-year lock-in with tax-free returns makes PPF one of India’s best long-term compounding instruments for conservative investors.
3. NSC (National Savings Certificate) – Annual Compounding
NSC compounds annually at 7.70% p.a. (current rate). Over the 5-year tenure, the compounding works on all 5 years of accumulated interest. NSC interest is eligible for Section 80C deduction in Years 1–4 (since it is reinvested and compounded), making the effective post-tax return significantly higher for taxpayers in higher brackets.
4. EPF (Employees Provident Fund) – Monthly Compounding in Practice
EPF interest is declared annually (currently 8.25% for FY 2025-26) but calculated monthly on the running balance. The annual declared interest is therefore an effective annual rate, not a nominal rate. EPF’s combination of employer contribution, tax deduction, and tax-free maturity makes the effective compounding return significantly higher than the stated rate for most salaried employees.
5. Mutual Funds – Daily NAV Compounding
Equity and debt mutual funds effectively compound daily through NAV (Net Asset Value) changes. Unlike bank FDs with a fixed rate, mutual fund returns are market-linked. However, staying invested long-term in equity funds harnesses the power of compounding through business growth — the same mathematical mechanism. A systematic investment through SIP combines rupee cost averaging with the compounding of returns.
6. Savings Account Interest – Quarterly Credited
Most banks credit savings account interest quarterly (at 2.7%–4% p.a. for major banks, up to 7% for some small finance banks). While the rate is low, the interest compounds quarterly. For large balances, even this small compounding effect adds up. Sweep-in FDs linked to savings accounts automatically move excess balances into higher-yielding FDs, effectively getting you better compounding on idle funds.
7. Home Loans – Compound Interest on Reducing Balance
Home loans use compound interest calculated on the reducing monthly balance. Each month, interest is charged only on the outstanding principal — as you repay principal, the interest amount in future EMIs decreases. This is technically compound interest working in the lender’s favour. Understanding this helps you realise why part-prepayment in the early years of a home loan saves dramatically more interest than in later years.