Compound interest formula
₹1,00,000 at 8% compounded quarterly for 10 years grows to about ₹2,20,804. Compounded yearly it would be ₹2,15,892.
Effective yearly rate
More frequent compounding means a slightly higher real return. 8% compounded quarterly works out to about 8.24% a year. Banks often quote fixed deposits with quarterly compounding, so this figure helps you compare offers fairly.
Simple vs compound interest
Simple interest is paid only on the original amount. Compound interest is paid on the original amount and on interest already earned, so the gap widens every year.
Frequently asked questions
What is compound interest?
Interest calculated on both the original amount and the interest already added to it.
Which compounding should I pick for a bank FD?
Many banks in India compound fixed deposits quarterly. Check your bank’s terms.
What is the effective annual rate?
The yearly return after compounding. It is what you really earn and lets you compare rates with different compounding.
Can I add regular deposits?
Yes. Tick “Add money every month” to include a monthly deposit.