Compound Interest Calculator

Match the compounding to the product, not the textbook

The school formula treats compounding frequency as a free choice. In practice the product decides it for you, and the dropdown on this calculator is labelled by product for that reason.

• Bank FD, cumulative: quarterly. SBI, HDFC, ICICI, the co-operative bank on your street, all of them. The only exception is an FD where you take a monthly or quarterly payout instead of reinvesting, in which case nothing compounds at all.
• Savings account: interest is worked out on the daily closing balance but only credited every quarter, so quarterly is the honest setting. Most large banks pay 2.5 to 3 percent on it, which is why nobody should be doing ten-year sums on a savings balance.
• Recurring deposit: quarterly again. Put 0 as the starting amount and the instalment as the monthly deposit.
• PPF and NSC: yearly. PPF interest is calculated month by month on the lowest balance between the 5th and the last day, but the credit hits the account once, on 31 March. NSC compounds annually and pays out at the end of five years.
• Mutual funds and SIPs: there is no compounding frequency at all, only a NAV going up and down. The monthly option is a fair approximation when you want a rough SIP number, but the SIP calculator is the right place for that.

The remaining inputs are plain. Starting amount, an optional monthly deposit, the rate in percent per annum, and the tenure in years. Deposits are assumed to land at the end of each month, which is the conservative reading; a standing instruction dated the 1st earns a few rupees more.

₹5 lakh at 7% for ten years, in quarters

The lump-sum formula:

A = P × (1 + r/n)^(n × t)

P is the starting amount, r the yearly rate as a decimal, n the number of compounding periods a year and t the tenure in years.

With the defaults, r/n is 0.07 ÷ 4 = 0.0175 per quarter, and there are 40 quarters:

A = 5,00,000 × (1.0175)^40
A = 5,00,000 × 2.001597
A = 10,00,798.67

You put in	₹5,00,000.00
Interest earned	₹5,00,798.67
Maturity value	₹10,00,798.67
At simple interest instead	₹8,50,000.00

So ₹5 lakh becomes just over ₹10 lakh: the money doubles in ten years at 7 percent, with quarterly compounding nudging it past the line by ₹798.67. The last row is what the same deposit would have earned if the interest had been paid out and kept in a drawer, ₹3,50,000 instead of ₹5,00,798.67. Compounding is worth ₹1,50,798.67 here, and nearly all of that arrives in the second half of the tenure.

The frequency table

Same ₹5 lakh, same 7 percent, same ten years, only the dropdown changed:

Compounding	Maturity value	Interest
Yearly	₹9,83,575.68	₹4,83,575.68
Quarterly	₹10,00,798.67	₹5,00,798.67
Monthly	₹10,04,830.69	₹5,04,830.69
Daily	₹10,06,808.78	₹5,06,808.78

Yearly to quarterly is worth ₹17,223, which is why a calculator that silently assumes yearly compounding understates every Indian FD. Quarterly to daily is worth about ₹6,000 over a full decade, which is the size of “daily compounding” as an advertised feature.

Adding ₹5,000 a month

Put ₹5,000 in the monthly deposit box and leave everything else alone. The calculator converts the quarterly rate into the matching monthly rate rather than pretending 7 percent divided by 12 is the same thing, so the two streams are on the same footing.

You put in	₹11,00,000.00
Interest earned	₹7,64,299.36
Maturity value	₹18,64,299.36

The ₹6 lakh of deposits earned ₹2,63,500.69 between them, far less than the ₹5,00,798.67 the original lump sum earned, because the average deposit was only in the account for five years. That is the whole argument for starting a SIP or RD early and the whole reason a late start needs a bigger instalment.

Tax, TDS and the auto-renewal that quietly changes the rate

Every rupee of interest in the tables above is taxable at your slab rate, and it is taxed in the financial year it accrues, not when the FD matures. A cumulative FD that pays you nothing until year ten still generates interest income in each of the ten ITRs in between. Form 26AS and the AIS will show it whether you remember it or not.

For FY 2025-26 the bank deducts 10 percent TDS once your interest at that bank crosses ₹50,000 in the year, or ₹1 lakh if you are a senior citizen. Submit Form 15G or 15H at the start of April if your total income is below the taxable limit and the deduction stops. TDS is not the whole tax, only an advance on it; in the 30 percent slab you owe the other 20 percent at filing time.

Put the after-tax rate into the calculator if you want the real number. For someone paying 30 percent, a 7 percent FD is a 4.9 percent FD, and ₹5 lakh grows to ₹8,13,732.05 over ten years, not ₹10 lakh. A 7.1 percent PPF is tax-free and yearly-compounded: ₹9,92,806.73 on the same ₹5 lakh, all of it yours. The PPF calculator handles the ₹1.5 lakh annual cap and the 15-year lock-in that this one does not know about.

Then there is auto-renewal. A ten-year FD is rare; most people book one to three years and let it roll over. At renewal the bank applies whatever rate is on the card that day, and the rate card is not flat. At the time of writing, several large banks pay less for a five-year deposit than for a two-year one. A 7 percent projection over ten years assumes you renegotiate at 7 percent five times. Set a reminder for each maturity date and shop the renewal like a fresh deposit.

Why the bank’s advice slip will not match to the paisa

The FD advice HDFC or SBI prints will usually be within a few rupees of this calculator, rarely exact, for three reasons.

Banks count actual days. A quarter is 90, 91 or 92 days, a leap year has 366, and the interest for a broken quarter at the start or end of the tenure is worked out on days, not on a neat 1.75 percent. On ₹5 lakh the difference is tens of rupees.

Banks round at each credit. Interest is credited to the paisa every quarter and the next quarter starts from the rounded balance. Over 40 quarters that drifts by a rupee or two.

Premature closure is a different calculation altogether. Break the FD in year three and you get the card rate for a three-year deposit as it stood on the day you booked, minus a penalty of 0.5 to 1 percentage point, not 7 percent for three years. If there is any chance you will need the money, split it into a few smaller FDs so a small need does not break a large deposit. The FD calculator has the senior citizen add-on and the effective yield that a comparison across banks needs.

Compounding versus simple interest, and which calculator to open next

The “at simple interest instead” line is on the page to make the gap visible, not because anything you will buy at a bank pays simple interest on a ten-year deposit. Where simple interest genuinely applies is short: a gold loan for a few months, interest on late GST or TDS, a hand loan at so many rupees per hundred. The simple interest calculator has those.

If you are working backwards from a target, the “how much a month to reach ₹2 lakh by next Diwali” question, the savings goal calculator rearranges the same formula for the deposit. And if you already have a start value, an end value and a number of years, and want to know what rate that implies, the ROI calculator does the inverse: it will tell you that “doubled in ten years” is the 7.2 percent you see above, no more.