Compound Interest Calculator
Free online compound interest calculator. Calculate compounding interest, total maturity amount, and interest growth with flexible annual, quarterly, or monthly intervals with ATS.
Key takeaways
- Compound interest is "interest on interest", accelerating wealth growth exponentially over time.
- Formula: A = P × [1 + (r / n)]^(nt), where Compound Interest = A - P.
- The longer the time horizon, the more interest eclipses the original principal invested.
- Albert Einstein famously called compound interest the "eighth wonder of the world".
About the Compound Interest Calculator
Compound interest is the mechanism whereby interest is calculated on both the initial principal deposit and the accumulated interest from preceding periods. Unlike simple interest, which grows linearly, compound interest grows exponentially, creating a snowball effect that accelerates wealth accumulation over time.
Whether you are depositing funds in a bank fixed deposit, compounding returns through dividend reinvestment, or calculating borrowing costs on leveraged debt, understanding compounding intervals is vital to financial success.
The ATS Compound Interest Calculator allows you to model maturity amounts across annual, semi-annual, quarterly, and monthly compounding cycles with live visual proportions.
| Tenure (Years) | Simple Interest Total | Compound Interest Total (Annual) | Compounding Advantage |
|---|---|---|---|
| 5 Years | ₹1,50,000 | ₹1,61,051 | + ₹11,051 |
| 10 Years | ₹2,00,000 | ₹2,59,374 | + ₹59,374 |
| 15 Years | ₹2,50,000 | ₹4,17,725 | + ₹1,67,725 |
| 20 Years | ₹3,00,000 | ₹6,72,750 | + ₹3,72,750 |
Worked example
- Principal (P) = ₹50,000 | Annual Rate (r) = 10% | Time (t) = 5 Years | Compounding = Quarterly (n=4).
- Effective quarterly rate = 10% ÷ 4 = 2.5% (0.025) per quarter.
- Total periods = 4 × 5 = 20 quarters.
- Maturity Amount (A) = 50,000 × (1 + 0.025)^20 = ₹81,931.
- Compound Interest = ₹81,931 - ₹50,000 = ₹31,931.
Frequently Asked Questions
What is compound interest?
Compound interest is interest calculated on both the initial principal and the accumulated interest from earlier compounding cycles. It earns "interest on interest", resulting in exponential wealth growth.
How is compound interest calculated?
The formula is: A = P × [1 + (r / n)]^(nt), where A is total maturity amount, P is principal, r is annual interest rate (in decimal), n is compounding frequency per year, and t is time in years. Compound interest is A - P.
What is the Rule of 72 in compound interest?
The Rule of 72 estimates how long it takes for an investment to double at a constant annual return. Divide 72 by the annual interest rate (e.g., at 12% return, your money doubles in 72 ÷ 12 = 6 years).
Which compounding frequency generates the highest returns?
More frequent compounding generates higher returns. Monthly compounding yields slightly more than quarterly compounding, which in turn yields more than annual compounding.
Do Indian banks compound interest quarterly?
Yes. Most commercial banks in India (SBI, HDFC, ICICI, etc.) compound interest on savings accounts and fixed deposits on a quarterly basis.
Is the ATS Compound Interest Calculator free?
Yes, it is 100% free, runs client-side in your browser, and requires no registration or personal data.