Compound Interest Calculator

In layman's terms, compound interest is interest on interest. Compound interest is calculated when the principal includes the accumulated interest from previous periods and interest is calculated on this. Compounding applies to loans, deposits, and investments. The number of times interest is calculated in a year is referred to as the compounding frequency. Compounding occurs on a daily, weekly, monthly, quarterly, half-yearly, and annual basis. The more frequently compounding occurs, the greater the amount of compound interest. The instrument determines the frequency of compounding. Credit card loans are typically compounded on a monthly basis, whereas savings bank accounts are compounded on a daily basis.

How can compound interest help you?

The Compound Interest Calculator uses compound interest to calculate how much your money grows over time. The Compound Interest Calculator can also calculate the effect of different interest rates and loan terms on the total compound interest you will pay on your loan. The Compound Interest Calculator online is based on the CI formula. Enter the principal amount, investment term, expected return rate, and compounding frequency in the compound interest formula calculator. The results of the Compound Interest Calculator are displayed as the maturity amount at the end of the investment term.

Benefits of compound interest calculator

Following are the benefits of the compound interest calculator:

• It helps you calculate an accurate figure and percentage of returns over a given time period.
• A reliable calculator can help you determine how much investment you will need over time.
• Paytm offers a customizable compound interest rate calculator where you can enter values based on your needs.

How to calculate compound interest calculator?

A simple formula can be used to calculate compound interest.

Compound Interest = Total amount of future principal and interest (or Future Value) - current principal amount (or Present Value)

Compound Interest = P [(1 + i) n – 1]

P denotes the principal, I the interest rate, and n the number of compounding periods.

How to use Paytm;s compound interest calculator?

Here's how to use a Paytm compound interest calculator:

• Enter the principal amount, interest rate, and tenure for which interest is to be calculated.
• The Paytm compound interest calculator will then display the results in seconds.

What are the frequencies at which compound interest is calculated?

The compound interest calculator provides options for:

• Daily compounding
• Monthly compounding
• Quarterly compounding
• Half-yearly compounding
• Yearly compounding

Interest on savings accounts can be compounded at the start or end of the compounding period (month or year).

How can you benefit from compound interest?

Here are a few ways to benefit from compound interest.

Invest early: This ensures that your money earns as much as possible. Furthermore, regular investing is just as important as early investing. Regular investing can help you avoid market timing. Small amounts of money invested on a regular basis can add up to large sums of money.

Intervals of compounding: The greater the frequency of compounding, the greater the interest earned. Choose investments that pay out more often than those that pay out less frequently.

Long term investment: Keeping your investment for a long time allows you to earn interest for a longer period of time. Holding for an extended period is critical because compounding only works in the long term.

Higher rates of return: Only an investment with a high rate of return can provide you with more money. Choose higher-yielding investment options such as mutual funds. The full benefits of compounding will be realised only then.

Loan repayment: Reduce the interest burden by increasing the frequency of loan payments. Pay one or two months' worth of extra EMIs per year to reduce the total interest paid on loans.