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Compound Interest Calculator Online Free

Calculate compound interest on any investment or loan. See how your money grows when interest is earned on interest — the power of compounding over time.

Formula Used:

A = P × (1 + r/n)n×t

Where P = Principal, r = Annual Rate, n = Compounding periods/year, t = Time (years)

Final Amount (A)
—
Principal (P)—
Total Interest Earned—
Effective Annual Rate (EAR)—

Simple vs Compound Interest Comparison

Simple InterestCompound InterestAdvantage
Interest Earned — — —
Final Amount — — —
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How to Use the Compound Interest Calculator

  1. Enter your principal amount — the initial investment or loan amount.
  2. Enter the annual interest rate offered by your bank or investment.
  3. Enter the time period in years.
  4. Choose how often interest is compounded — more frequent compounding means higher returns.
  5. See final amount, total interest, and comparison with simple interest.

Frequently Asked Questions

Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. Unlike simple interest (which is only on the principal), compound interest causes your money to grow exponentially — commonly referred to as "interest on interest."

Simple Interest = P × r × t. It always applies to the original principal only. Compound interest applies to the growing balance — so each period you earn interest on a larger base. Over long periods, the difference is enormous. ₹1 lakh at 10% for 20 years: Simple Interest gives ₹3 lakh; Compound (annual) gives ₹6.73 lakh.

The more frequently interest compounds, the higher your effective return. For example, at 10% p.a. on ₹1 lakh for 1 year: Annual compounding gives ₹1,10,000; Monthly gives ₹1,10,471; Daily gives ₹1,10,516. The difference grows significantly over longer periods and higher principals.

Compound interest is used in Fixed Deposits (quarterly compounding), PPF and EPF (annual compounding), mutual funds (daily NAV-based compounding), home loans (monthly reducing balance), and RD accounts. Credit card outstanding balances also compound — making timely repayment crucial.

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