Compound Interest Calculator
See how your money grows over time with the power of compound interest. Calculate returns on investments, savings, and FDs.
About Compound Interest
Compound interest is interest calculated on the initial principal and also on the accumulated interest from previous periods. The formula is: A = P(1 + r/n)^(nt) where P is principal, r is annual rate, n is compounding frequency, and t is time in years.
How to Use This Tool
Enter Principal Amount
Enter the initial investment or deposit amount in the principal field.
Set Interest Rate & Period
Enter the annual interest rate and the number of years for the investment.
Choose Compounding Frequency
Select how often interest is compounded — annually, semi-annually, quarterly, monthly, or daily.
View Results
See the total amount, interest earned, effective annual rate, and year-by-year breakdown.
Key Features
Year-by-Year Breakdown
See how your investment grows each year with a detailed table showing opening balance, interest, and closing balance.
Multiple Compounding Options
Compare results with Annual, Semi-Annual, Quarterly, Monthly, or Daily compounding frequencies.
Effective Annual Rate
See the true annual return accounting for compounding frequency, not just the nominal rate.
Instant Calculations
Results update instantly when you change any input. No waiting, no page reloads.
Common Use Cases
- Planning Fixed Deposit (FD) investments to compare returns across banks
- Calculating the future value of savings accounts with monthly compounding
- Comparing investment options with different compounding frequencies
- Understanding how much your retirement fund will grow over 20-30 years
- Teaching students about the power of compound interest vs simple interest
Frequently Asked Questions
What is compound interest?
Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. Unlike simple interest, your money earns 'interest on interest,' leading to exponential growth over time.
What's the formula for compound interest?
The formula is A = P(1 + r/n)^(nt), where A is the final amount, P is the principal, r is the annual interest rate, n is the compounding frequency per year, and t is the time in years.
What's the difference between APR and APY?
APR (Annual Percentage Rate) is the stated annual rate without compounding. APY (Annual Percentage Yield) includes the effect of compounding. Our calculator shows the Effective Annual Rate, which is equivalent to APY.
How does compounding frequency affect returns?
More frequent compounding (e.g., daily vs. annually) produces slightly higher returns because interest is calculated on previously earned interest more often. The difference becomes more significant over longer periods.
Is compound interest better than simple interest?
For investors, yes. Compound interest earns more over time because interest accumulates on both the principal and previously earned interest. Over long periods, the difference can be substantial.
How can I maximize compound interest?
Start investing early, choose investments with higher interest rates, select more frequent compounding (monthly or daily), and avoid withdrawing earned interest. Time is the most powerful factor in compounding.