How is compound interest calculated?
Compound interest uses A = P x (1 + r/n)^(n x t), where P is the starting amount, r the yearly rate, n how often interest compounds each year and t the years. Interest earned is A minus P. Enter these, plus any monthly addition, in FixDoks's Compound Interest Calculator to see the final amount and interest.
Compound Interest Calculator at a glance
| Inputs | Starting amount, rate, years, compounding frequency, monthly addition |
|---|---|
| Output | Final amount, interest earned, comparison with simple interest |
| Processing | In your browser; your files are not uploaded |
| Price | Free |
| Works on | Chrome, Edge, Safari and Firefox on Windows, Mac, Android and iPhone |
How to use Compound Interest Calculator
- Enter the starting amount, the yearly interest rate and the number of years.
- Choose how often interest is compounded.
- Optional: add a monthly addition to include regular savings.
- Read the final amount and interest, and compare with simple interest.
What is compound interest?
With simple interest you earn interest only on the money you put in. With compound interest, interest is added to the balance and then earns interest itself. Over short periods the difference is small. Over decades it is huge, which is why compounding sits behind every long-term savings plan.
What is the compound interest formula?
A = P × (1 + r ÷ n)n × t
- A is the final amount and P the starting amount.
- r is the yearly rate as a decimal.
- n is the number of times interest is compounded each year.
- t is the time in years.
Compound interest earned = A − P. Simple interest, for comparison, is P × r × t.
Worked example
₹1,00,000 at 8% for 10 years:
| Compounding | Final amount | Interest |
|---|---|---|
| Simple interest | ₹1,80,000 | ₹80,000 |
| Yearly | ₹2,15,892 | ₹1,15,892 |
| Quarterly | ₹2,20,804 | ₹1,20,804 |
| Monthly | ₹2,21,964 | ₹1,21,964 |
For yearly compounding: 1,00,000 × (1.08)10 = 1,00,000 × 2.1589 = ₹2,15,892. Compounding more often helps, but the rate and the time matter far more than the frequency.
Adding money every month
When you add a fixed amount each month, the calculator works month by month using the monthly rate that matches your chosen compounding, and adds your top-up at the end of each month. This models a savings account or a debt fund you keep adding to.
What is the rule of 72?
A quick way to estimate doubling time: divide 72 by the yearly rate. At 8%, money doubles in about 9 years. At 12%, in about 6 years. The rule is an approximation that works best for rates between 6% and 10%.
Nominal vs real return
If prices rise by 5% a year, money growing at 8% gains only about 3% in buying power. To see the real value of a future amount, run the calculator a second time with the inflation rate and divide. Over long periods, inflation matters as much as the interest rate itself.
Compounding also works against you
Credit card balances and some loans compound too, often monthly at high rates. An unpaid card balance at 3.5% a month grows by more than 50% in a year. Use this calculator with the card's monthly rate × 12 to see the real cost of carrying a balance.
The calculator works in any currency. It does not include tax on interest, which reduces the real return from taxable deposits.
Results are estimates for planning. Your bank, fund house or the tax department may round differently or apply extra charges, so check the final figure with them.