Calculate compound interest at any frequency: yearly, half yearly, quarterly, monthly, or daily. See the final amount and how much compounding beats simple interest.
What is the difference between simple and compound interest?
Simple interest is charged only on the original amount. Compound interest adds each period’s interest to the balance, so the next period earns on a bigger number. Over 5 years at 10%, the gap on ₹1,00,000 is ₹11,051.
Does compounding more often really help?
It helps, but less than people expect. ₹1,00,000 at 10% for 5 years pays ₹61,051 compounded yearly, ₹63,862 quarterly, ₹64,531 monthly, and ₹64,861 daily. Going from yearly to quarterly gains more than going from monthly to daily.
What is the effective yearly rate?
It is the single yearly rate that gives the same result. 10% compounded quarterly has an effective rate of 10.38%. When two products quote different frequencies, compare the effective rates, not the headline ones.
How long does money take to double?
Divide 72 by the rate for a quick estimate. At 8%, that is 9 years. The rule of 72 is close enough for anything between 6% and 15%, and it works in your head.
Which Indian products compound quarterly?
Bank fixed deposits, recurring deposits, and PPF all compound at set intervals rather than daily. Most bank FDs and RDs use quarterly compounding. Savings account interest is calculated daily but paid quarterly.
Does compound interest work against me on a loan?
Yes, and hard. Credit card interest compounds monthly at rates near 36% to 42% a year. ₹50,000 left unpaid for a year at 3.5% a month becomes about ₹75,000. Clear the full statement amount, not the minimum due.