See how money grows when interest earns interest, with any compounding frequency.
Final amount
Principal
Interest earned
Principal 62%
Interest 38%
Growth year by year
Year
Interest that year
Balance
1
₹10,000
₹1,10,000
2
₹11,000
₹1,21,000
3
₹12,100
₹1,33,100
4
₹13,310
₹1,46,410
5
₹14,641
₹1,61,051
With compound interest, the interest you earn is added to your balance and starts earning interest too. Over long periods the effect is powerful, which is why starting to save early matters more than saving large amounts later.
Example: ₹1 lakh at 10% for 5 years
Compounded yearly: about ₹1,61,051.
Compounded quarterly: about ₹1,63,862.
Compounded monthly: about ₹1,64,531.
Simple interest at the same rate would give only ₹1,50,000. The more often interest compounds, the more you earn, although the gain from going beyond monthly is small.
Where you see compounding
Fixed deposits (usually quarterly) and recurring deposits.
Savings accounts (interest calculated daily, credited quarterly or more often).
Loans and credit card dues, where compounding works against you. Unpaid credit card balances can grow very quickly.
How this is calculated
A = P × (1 + r ÷ n)n × t
P is the principal, r the annual rate (as a decimal), n how many times a year interest is added and t the number of years. The more often interest compounds, the faster the balance grows.
Rules and formula last verified: 12 October 2026
Frequently asked questions
What is the difference between simple and compound interest?
Simple interest is earned only on the original amount. Compound interest is earned on the original amount plus the interest already added.
What is the effective annual rate?
It is the yearly rate after compounding. For example, 10% compounded monthly works out to about 10.47% a year.
Results are estimates for information only, based on the inputs and assumptions shown. They are not financial, tax or legal advice. Banks, fund houses and the tax department may calculate actual amounts differently.
