Finance
How to Calculate Compound Interest
AllinOne Editorial · Published 2026-09-16
Savings grow on a larger base each period. A loan EMI shrinks a balance — do not mix the two formulas.
Simple interest is charged only on the original principal. Compound interest is charged on principal plus interest already earned, so the balance can accelerate. How often it compounds (yearly, monthly, daily) changes the result even when the stated annual rate is the same.
How this site compounds
Each month the balance is multiplied by (1 + r/n)^(n/12), then any monthly contribution is added. r is the annual rate as a decimal and n is compounds per year (1, 2, 4, 12 or 365). That monthly factor matches the frequency you pick.
Worked example
100,000 at 10% compounded monthly for 10 years with no extra deposits grows to about 270,704. Adding 5,000 a month on top of that starting amount grows both the deposits and the interest.
Banks may use slightly different day-count rules. Treat the calculator as a planning estimate, not a bank statement.
Frequently asked questions
Is compound interest the same as EMI?+
No. Compound interest grows a deposit or investment. EMI is a payment that reduces a loan.
Are tax and inflation included?+
No. The result is a nominal future value from the rate you type.
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