Compound Interest Calculator (with Simple Interest)

About this compound interest calculator

This calculator puts simple interest and compound interest side by side for the same principal, rate and time. You type in four things: Principal, Annual rate (%), Time (years) and a Compounding choice. It then shows the simple interest, the compound interest and the final compound amount.

It is built for anyone who wants to see what a rate really does to money over time. Students meet the two formulas in school maths and again in commerce and economics. Adults use the same idea when they look at a fixed deposit, a recurring savings plan, a gold loan, a personal loan or an unpaid card balance.

People usually reach for it when two offers look close but are not. A deposit at 7% compounded quarterly and one at 7.1% paid out yearly can end up in different places after a few years, and the only honest way to compare them is to run the numbers. Seeing both methods next to each other also makes the pull of compounding easy to feel, which is hard to get from a formula alone.

How to use the Compound Interest Calculator, step by step

1. Enter the principal. Type the starting amount in the Principal box. For a deposit it is the money you put in. For a loan or a credit card it is the amount borrowed or the balance left unpaid. Use plain digits without commas.
2. Enter the annual rate. Put the yearly rate in Annual rate (%). If your bank quotes 7.25%, type 7.25. Do not convert it to a monthly rate, because the calculator divides the annual rate by the compounding frequency itself.
3. Enter the time in years. Type the period in Time (years). Decimals work, so 18 months is 1.5 and 6 months is 0.5. If your term is in days, divide by 365 first to get a fair estimate.
4. Pick how often interest compounds. Choose Yearly, Half-yearly, Quarterly or Monthly from the Compounding list. Match it to your product. Monthly is set by default. The choice has no effect on simple interest, which ignores compounding.
5. Read the three results. Simple interest shows the straight-line figure. Compound interest shows the extra earned with compounding on. Compound amount is principal plus compound interest, the full sum you would hold at the end of the term.
6. Change one thing at a time. To learn something, alter a single input and watch the results move. Lengthen the time, raise the rate by one point, or flip the compounding option. The gap between simple and compound interest shows how much each change really matters.

The formula behind the Compound Interest Calculator

Simple interest grows in a straight line, while compound interest multiplies the balance a little each period. The calculator uses the standard forms of both.

Simple interest: SI = P × r × t
Compound amount: A = P × (1 + r ÷ n)^(n × t)
Compound interest: CI = A − P

What each symbol means

P

Principal, the amount you start with (deposited or borrowed).

r

Annual interest rate written as a decimal, so 8% is 0.08.

t

Time in years.

n

Number of times interest is added per year: 1 for yearly, 2 for half-yearly, 4 for quarterly, 12 for monthly.

A

Final amount after t years, principal plus all interest.

SI

Simple interest earned, calculated on the original principal only.

CI

Compound interest earned, which is A minus P.

How the formula works

Simple interest is the easy case. Each year the interest is a fixed share of the original principal, so a rate of 8% on 1,00,000 pays 8,000 every year, whether it is year one or year twenty. The total is just P × r × t, a straight line on a graph. Nothing that was already earned ever earns anything itself.

Compounding changes one thing: earned interest is added to the balance, and the next period's interest is worked out on that bigger balance. If a period pays a fraction r ÷ n, the balance is multiplied by (1 + r ÷ n). Do that n × t times and you get (1 + r ÷ n) raised to the power n × t. That repeated multiplication is the whole formula.

Frequency matters, but less than most people expect. Going from yearly to monthly at 8% for five years adds roughly 2,000 on a 1,00,000 deposit, far less than a one-point rise in the rate would. As n grows, the amount creeps toward a ceiling rather than exploding. The table below shows that flattening clearly, including a daily row for comparison.

Two cautions apply. First, the formula assumes the rate stays fixed and that nothing is withdrawn or added, so real products with changing rates or regular deposits need a different calculation. Second, interest is not the same as purchasing power. If prices rise faster than your rate, the money grows on paper but buys less. Economists call the rate after allowing for price rises the real return. A product can also be taxed on its interest, so check the current rules for yours.

Worked examples

A bank fixed deposit

Meera puts ₹2,00,000 in a 3-year fixed deposit at 7% a year, compounded quarterly. She also wants to see what simple interest would have paid.

1. Simple interest: SI = 2,00,000 × 0.07 × 3 = ₹42,000.
2. Rate per quarter: r ÷ n = 0.07 ÷ 4 = 0.0175. Number of quarters: n × t = 4 × 3 = 12.
3. Growth factor: (1.0175)^12 = 1.231439 (rounded to six places).
4. Amount: A = 2,00,000 × 1.231439 = ₹2,46,287.86.
5. Compound interest: CI = 2,46,287.86 − 2,00,000 = ₹46,287.86.

Result: Compound interest ₹46,287.86 against ₹42,000 simple, a difference of ₹4,287.86; maturity amount ₹2,46,287.86.

A long wait at yearly compounding

Rohan invests ₹50,000 for his child at 8% a year, compounded yearly, and leaves it alone for 10 years.

1. Simple interest: SI = 50,000 × 0.08 × 10 = ₹40,000, so simple interest would give ₹90,000.
2. Yearly compounding means n = 1, so the factor is (1.08)^10.
3. (1.08)^10 = 2.158925 (rounded to six places).
4. Amount: A = 50,000 × 2.158925 = ₹1,07,946.25.
5. Compound interest: CI = 1,07,946.25 − 50,000 = ₹57,946.25.

Result: The money more than doubles to ₹1,07,946.25; compounding adds ₹17,946.25 over simple interest.

An unpaid card balance

Asha leaves ₹25,000 unpaid on a card that charges 18% a year, compounded monthly, and makes no payments for 2 years. This is a deliberately plain case to show how debt grows.

1. Monthly rate: 0.18 ÷ 12 = 0.015. Number of months: 12 × 2 = 24.
2. Growth factor: (1.015)^24 = 1.429503 (rounded to six places).
3. Amount owed: A = 25,000 × 1.429503 = ₹35,737.57.
4. Compound interest: CI = 35,737.57 − 25,000 = ₹10,737.57.
5. For comparison, simple interest would be 25,000 × 0.18 × 2 = ₹9,000.

Result: The balance grows to ₹35,737.57, about ₹1,737.57 more than simple interest would charge.

Reference tables

Year-by-year growth of ₹1,00,000 at 8% a year

This table compares simple interest with yearly compounding for the same deposit. The last column shows the extra earned only because of compounding. It starts small and then speeds up.

Effect of compounding frequency on ₹1,00,000 at 8% for 5 years

The rate, principal and time are fixed. Only the number of compounding periods per year changes. The gain from each step is smaller than the one before.

Rule of 72 against the exact doubling time

The rule of 72 estimates the years needed to double money as 72 divided by the annual rate. Exact doubling time with yearly compounding is ln 2 ÷ ln(1 + r). The last column is the rule minus the exact figure, in years.

Common mistakes and tips

Entering the rate as a monthly figure

The calculator expects the yearly rate. If a lender says 1.5% a month, that is 18% a year, and you should type 18, then choose Monthly. Typing 1.5 would understate the result by a huge margin.

Ignoring compounding on loans

A loan quoted with simple interest and a loan that compounds are very different products. Always ask which method applies, how often it compounds and whether there are fees on top. The higher the rate and the longer the time, the more it matters.

Using the rule of 72 as exact

The rule is a mental shortcut. The table above shows it is closest near 8% and drifts at very low or very high rates. Use it to sense scale, such as doubling in about nine years at 8%, then use the calculator for real figures.

Assuming your bank follows the same method

Banks set their own rules for compounding, day counts and rounding. Some fixed deposits compound quarterly, and some pay interest out instead of reinvesting it. Read your deposit terms and pick the matching compounding option, then treat the result as an estimate.

Mixing up time units

Time must be in years. Seven months is 7 ÷ 12 = 0.5833, not 7. Entering months as years is one of the most common reasons results look absurdly large.

Forgetting inflation and tax

A nominal return is what the account shows. Rising prices reduce what that money can buy, and interest may be taxable under current rules. Neither is in the calculator, so remember them when judging a goal, and confirm tax treatment with a qualified professional.

Where people use this calculator

Comparing deposit offers

Two banks may quote slightly different rates and compounding schedules. Enter the same principal and period for each, choose the matching frequency, and compare the maturity amounts directly instead of guessing from the headline rate.

Understanding loan and card costs

Run an unpaid balance through the calculator to see how a high rate snowballs when nothing is repaid. It is a blunt picture, since real loans have repayments, but it shows why early repayment matters.

Checking school and college problems

Commerce, economics and maths courses all set simple versus compound interest questions. Use the results to confirm your own working, and read the year-by-year table to see why the two answers drift apart.

Setting a rough savings goal

If you want a lump sum in ten or fifteen years, test a few rates and times to see how much a starting amount might grow. It shows how much starting early helps, without promising any actual return.

Teaching children about money

Showing a child how 50,000 grows over ten years at a fixed rate, compared with the straight-line version, makes patience and early saving tangible. Change the rate and watch the final figure shift.

Frequently asked questions

Related calculators

Results are estimates for general information. See our disclaimer and about page for how we build and check these tools.

Last reviewed: October 2026. Spotted a mistake? Tell us on the contact page.