What is a Compound Interest Calculator?
The Compound Interest Calculator demonstrates the extraordinary power of compounding — earning interest on interest. It calculates both compound and simple interest for any principal, rate, time period, and compounding frequency, clearly showing why compounding is called the eighth wonder of the world.
Benefits of Using Rupee Logic Compound Interest Calculator
CI vs SI Comparison
See exactly how much more compound interest generates compared to simple interest over the same period.
Frequency Impact
Compare annual, quarterly, monthly, and daily compounding to see how frequency affects final returns.
Power of Time
Understand why small differences in investment horizon create massive differences in final corpus.
Rule of 72
Instantly verify the Rule of 72 — divide 72 by rate to know how many years to double your money.
Frequently Asked Questions — Compound Interest Calculator
Simple Interest calculates interest only on the principal. ₹1 lakh at 10% for 10 years = ₹1L total interest. Compound Interest calculates interest on principal plus accumulated interest. ₹1 lakh at 10% quarterly compounding for 10 years = ₹1.64L interest — 64% more than SI. The formula is: CI = P × [(1 + r/n)^(nt) - 1], where n is compounding frequency per year.
The Rule of 72 is a quick mental math shortcut: divide 72 by the annual interest rate to find approximate years to double your money. At 6% (PPF): 72/6 = 12 years; at 8%: 72/8 = 9 years; at 12% (equity SIP): 72/12 = 6 years; at 15%: 72/15 = 4.8 years. The rule works best for rates between 5% and 20% and is accurate within 1-2 years.
More frequent compounding means higher returns. ₹1 lakh at 10% for 10 years: annual compounding gives ₹2,59,374; quarterly gives ₹2,68,506; monthly gives ₹2,70,704; daily gives ₹2,71,791. The difference between annual and daily is ₹12,417 or about 4.8% more. FDs compound quarterly by default in India. Banks in India do not generally offer daily compounding for deposits.
Starting 10 years earlier can double or triple your final corpus for the same monthly investment. Example: ₹5,000/month SIP at 12% starting at age 25 for 35 years = ₹3.24 crore. Starting at 35 for 25 years = ₹94 lakh. Starting at 45 for 15 years = ₹25 lakh. The last 10-15 years generate the majority of corpus because compounding accelerates exponentially, not linearly.
Loans use compound interest in reverse — compounding works against you as a borrower. A ₹50 lakh home loan at 8.5% for 20 years results in total interest of ₹60+ lakh — more than the principal. Making even one extra EMI per year reduces a 20-year loan by 3-4 years. Prepayments in early years save far more than later prepayments because interest compounds on the outstanding principal balance.