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    We found 112 Compound Interest Formula
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    Deposit Amount Range
    Tenure Range
    Interest Rate
    Up to ₹25L
    1 Year to 5 Years
    7.75% - 8.6% Monthly compounding
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    Up to ₹25L
    1 Year to 5 Years
    7.72% - 8.65% Monthly compounding
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    Up to ₹1Cr
    7 Days to 20 Years
    5% - 7.75% Quarterly compounding
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    Up to ₹1Cr
    7 Days to 10 Years
    4% - 7.25% Quarterly compounding
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    Up to ₹1Cr
    7 Days to 10 Years
    4.25% - 7.05% Monthly compounding
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    Up to ₹1Cr
    15 Days to 20 Years
    5.75% - 7.25% Monthly compounding
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    Up to ₹1Cr
    7 Days to 10 Years
    4% - 7% Monthly compounding
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    NRI - FD
    Up to ₹1Cr
    1 Year to 5 Years
    6.5% - 6.8% Monthly compounding
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    NRI - FD
    Up to ₹1Cr
    1 Year to 10 Years
    6.5% - 6.75% Monthly compounding
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    NRI - FD
    Up to ₹1Cr
    1 Year onwards
    6.25% - 6.5% Monthly compounding
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    Up to ₹1Cr
    7 Days to 10 Years
    4% - 7.30% Quarterly compounding
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    NRI - FD
    Up to ₹1Cr
    1 Year to 5 Years
    6.80% Quarterly compounding
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    Compound Interest Formula

    Gone are the days of school mathematics, most of us easily forget, but a quick refresher may bring it all back. To understand compound interest in the easiest form, let’s take a look at what it means. Compound interest is a useful financial concept in which your interest earned is added to your principal. This amount then continues to earn more interest. So in this case, you also earn interest on the interest you’ve already earned. So your balance grows at an increasing rate. In a sense, you reinvest your interest, rather than receiving a pay-out.

    • Year 1 - You earn interest on your Principal.
    • Year 2 - You earn interest on your (Principal + Interest of Year 1).
    • Year 3 - You earn interest on your (Principal + Interest of Year 1 + Interest of Year 2).

    Compound interest is the basis of long-term growth of the stock market. It forms the basis of personal savings plans. Compound interest also affects inflation.

    Types of Compound Interest

    There are generally two types of compound interest used.

    • Periodic Compounding - Under this method, the interest rate is applied at intervals and generated. This interest is added to the principal. Periods here would mean annually, bi-annually, monthly, or weekly.
    • Continuous Compounding - This method uses a natural log-based formula and calculates interest at the smallest possible interval. This interest is added back to the principal. This can be equalled to the constant rate of growth for all natural growth. This figure was born out of physics. It uses Euler’s number which is a famous irrational number which is known to more than 1 trillion digits of accuracy. Euler’s number is denominated by the letter “E”.

    Periodic Compound Interest Formula Overview

    There are two formulas you can use to calculate compound interest, depending on what result you wish to find out. You can find out the following:

    • The total value of the deposit.
    • The total compound interest earned.

    Value of the Deposit

    Formulas can be a deterrent to many. If you aren’t savvy with math, your eyes turn away from these codes or just skip them altogether. But once it’s explained, it’s pretty simple to understand. To calculate the total value of your deposit, the formula is as follows:

    P (1+ i/n)nt

    P = Principal invested.

    i = Nominal Rate of Interest.

    n = Compounding Frequency or number of compounding periods in a year.

    t = Time, meaning the length of time the interest is applicable, generally in years.

    Simply put, you calculate the interest rate divided by the number of times in a year the compound interest is generated. For instance, if your bank compounds interest quarterly, there are 4 quarters in a year, so n = 4. This result must be multiplied to the power of the deposit period. For example, if your deposit is for 10 years, t = 10. This whole result should be multiplied by the principal you invested. The result generated will equal the total accumulated value of your deposit. You can find out how much your deposit is worth currently after accumulating interest.

    Total Compound Interest Earned

    To find out how much interest was earned, you can use the following formula for Compound Interest.

    P[(1+ i/n))nt-1]

    Compound Interest Equation and Calculation

    To understand the compound interest equation further, we can break it down in simpler terms. If you decide to invest in a fixed deposit with compound interest, this is how you will earn interest every year.

    Period Deposit Balance
    Investment P
    Year 1 P + iP
    Year 2 (P+ iP) + i(P+iP)

    To collapse this formula, we can pull out factors of (1+i). Simply substitute iP with (1+i) to get the following:

    Period Deposit Balance
    Investment P
    Year 1 P(1+i)
    Year 2 P(1+i)2
    Year 3 P(1+i)3

    Formula for Annual Compound Interest

    To calculate the compound interest for a number of years together, we need to multiply P(1+i) to the power of the number of years of the deposit. So we end up with this formula:

    P (1+ i/n)n

    This formula can be used to calculate compound interest that is compounded annually. This means you receive interest only once a year. It is added to your principal, and you continue to earn interest on the new amount.

    Half-Yearly, Quarterly, Monthly Compound Interest Formula

    If you are earning interest multiple times in a year, you need to factor in this number into the equation. So the formula generated is:

    P (1+ i/n)nt

    This formula can also be used for instances where the interest is compounded once every two years. In this case, n = 0.5, as each year is calculated as half.

    Examples of Compound Interest

    For example, Rs. 10,000 is invested in a fixed deposit for 10 years. The interest is compounded every quarter which means 4 times in a year. The interest paid by the bank is 5%. To find out your nominal rate of interest, you need to divide 5 by 100 which equals 0.05. Now, we look at the formula and substitute the letters with the relevant numbers.

    Calculating the Total Value of the Deposit

    P (1+ i/n)nt

    Step 1: 10,000 (1+0.05/4)4x10

    Step 2: 10,000(1+0.0125)40

    Step 3: 10,000 (1.0125)40

    Step 4: 10,000 (1.64361946349)

    Step 5: 16436.1946349

    We can round of this total to Rs. 16,436.19. So the compound interest earned after 10 years is Rs. 6,436.19.

    Calculating the Interest Earned

    We can also arrive at this figure using the formula for compound interest earned. We can substitute the numbers for letters as seen below:

    P[(1+ i/n)nt -1]

    Step 1: 10,000 [(1+0.05/4)4x10 -1]

    Step 2: 10,000 [(1+0.0125)40-1]

    Step 3: 10,000 [(1.0125)40-1]

    Step 4: 10,000 [(1.64361946349) -1]

    Step 5: 10,000 (0.664361946349

    Step 5: 6436.1946349

    We can now add this interest earned to the principal amount to find out the value of the deposit. The maturity value will be Rs. 16,436.19.

    The earnings through compound interest can be demonstrated with the following graph.

    FD Compund Interest

    Simple Interest vs. Compound Interest

    To demonstrate the difference between simple interest and compound interest, let’s take for example two fixed deposits. Both deposits are of Rs. 10,000 for 10 years. The interest offered on Deposit 1 is 5% compound interest. The interest offered on Deposit 2 is 5% simple interest. The interest is calculated annually on both deposits.

    Period Deposit 1 - Compound Interest Deposit 2 - Simple Interest Difference
    Year 1 Rs. 500 Rs. 500 Rs. 0
    Year 2 Rs. 1,025.00 Rs. 1,000 Rs. 25
    Year 3 Rs. 1,576.25 Rs. 1,500 Rs. 76.25
    Year 4 Rs. 2,115.06 Rs. 2,000 Rs. 115.06
    Year 5 Rs. 2,762.82 Rs. 2,500 Rs. 762.82
    Year 6 Rs. 3,400.96 Rs. 3,000 Rs. 400.96
    Year 7 Rs. 4,071.00 Rs. 3,500 Rs. 571.00
    Year 8 Rs. 4,774.55 Rs. 4,000 Rs. 774.55
    Year 9 Rs. 5,513.28 Rs. 4,500 Rs. 1,013.28
    Year 10 Rs. 6,288.95 Rs. 5,000 Rs. 1,288.95
    FD Comparison

    From the graph above, we can see clearly the higher earnings through compound interest compared to simple interest. The difference is not too much upto the 4th year. This is because the interest accumulated over the years is added to the principal, thus making the principal significantly higher. From Year 5, there is a major difference in the interest earned. At the end of 10 years, Deposit 1 earns Rs. 6,288.95, while Deposit 2 earns Rs. 5,000. The difference between the two is Rs. 1,288.95.

    Compound Interest with Monthly Contributions

    Compounding interest on fixed deposits where you are allowed to make monthly contributions can get a little tricky. For the amount invested during the compounding period, interest will be generated for the initial investment amount + monthly contributions. These deposits are rare but are an extremely good investment with whopping returns.

    For example, Rs. 10,000 is the initial fixed deposit amount. The investor deposits Rs. 1,000 every month for 5 years. If the interest is compounded annually, then the interest will be as follows:

    Period Investment Breakdown Investment + Interest Accumulated Interest Earned Total Value of Deposit
    Year 1 10,000 + 12,000 22,000 1,100 23,100
    Year 2 10000 + (12000 x 2) + 1,100 35,100 1,755 36,855
    Year 3 10000 + (12000 x 3) + (1,100 +1,755) 48,855 2,442.75 51,297.75
    Year 4 10000 + (12000 x 4) + (1,100 +1,755 + 2,442.75 ) 63.297.75 3164.87 66,462.64
    Year 5 10000 + (12000 x 5) + (1,100 +1,755 + 2,442.75 + 3164.87 ) 78,461.75 3,923.13 82,385.77

    Through this table, we can see that the interest earned is accumulated every year and added to the principal amount. The total money contributed by the investor is Rs. 10,000 initially, followed by Rs. 1,000 every month or Rs. 12,000 every year. The investor made a total contribution of Rs. 10,000 + Rs. 60,000. At the end of 5 years, the value of his deposit is Rs. 82,385.77. The total compound interest earned is Rs. 12,385.77.

    The Benefit of Compound Interest

    Compound interest is your biggest friend when it comes to deposits and investments. Working in favor of investments, you stand to gain much more from the interest payable. But compound interest will be your worst enemy when it is calculated on your loan or other debt. You will end up paying significantly more interest on your loan. In terms of fixed deposits, compound interest is a great way of earning more on your investment. You earn much higher returns with compound interest on long term deposits. Compounding interest monthly, quarterly and half-yearly can spike your interest even higher. The benefits of compound interest can be listed as follows:

    • Reinvestment - The interest earned will be reinvested into the same deposit.
    • Higher value of the deposit - Compound interest leads to a higher value of the deposit. Upon maturity, your deposit will be more than a deposit with simple interest.
    • Long-term savings - Compound interest deposits encourage long-term savings as the return on investment is much higher after 10 years or more.
    • Increased Earnings - Options of compounding monthly, quarterly, and half-yearly increase the interest earned.

    Financial platforms where compound interest is applicable

    Compound interest is used for both debit and credit aspects of the financial world. Listed below are some of the investments and credit options that use compound interest.

    Investments

    • Savings Accounts
    • Fixed Deposits
    • Recurring Deposits
    • Other Certificates of Deposits
    • Reinvested Dividend Stocks
    • Retirement Funds

    Debt

    • Loans
    • Credit Cards
    • Mortgages

    When it is used in case of deposits and investments, we stand to benefit. On the other hand, when compound interest is charged on loans and debt, the banks and lenders stand to gain.

    Compound Interest Formula Reviews

    • ICICI Bank Fixed Deposit
      "Good Investment Plan"
      0.5 4.0/5 "Great!"
      I have taken fixed deposit account in ICICI Bank . They are not charging any charges for the account . I used to get income tax benefits . Am satisfied with the customer service and response.They are giving good rate of interest . Overall am happy with my account .
      Was this review helpful? 1
      , hyderabad
      Reviewed on Oct 06, 2018
    • SBI Fixed Deposit
      "Good service"
      0.5 4.5/5 "Excellent!"
      I have a Fixed Deposit account with SBI from last 4 years, the maturity period for this FD is 18 years. I invested an amount of Rs 5 lacs in Fixed Deposit account. Customer service was good with SBI and i get good returns of 8% after the maturity period.
      Was this review helpful? 6
      , hyderabad
      Reviewed on Oct 01, 2018
    • Post Office Fixed Deposit
      "Good service"
      0.5 3.0/5 "Satisfactory"
      I have a Fixed Deposit account with India Post Office from last 1 year, i have invested an amount Rs 1 lac and maturity period is after 5 years. Customer service is very good and they explained all the terms and conditions. I get a returns of 7% and i am satisfied with it.
      Was this review helpful? 8
      , hyderabad
      Reviewed on Sep 26, 2018
    • HDFC Bank Fixed Deposit
      "Good overall"
      0.5 5.0/5 "Blown Away!"
      I have a fixed deposit account with HDFC Bank and the banking process is good. I could open this account online and the account has been beneficial too. I can also close this account without having to go in person to the bank. It can be done online too.
      Was this review helpful? 6
      , chennai
      Reviewed on Sep 15, 2018
    • SBI Fixed Deposit
      "Good service"
      0.5 4.0/5 "Great!"
      I have opened a Fixed Deposit with SBI since 2011, i have renewed the FD 2 to 3 times. Customer service is very good with this bank and they explained everything about the returns. I deposit an amount of Rs 1 lac and i get 6.75% as interest on returns.
      Was this review helpful? 14
      , kolkata
      Reviewed on Aug 29, 2018
    • IndusInd Bank Fixed Deposit
      "Satisfied with the services"
      0.5 5.0/5 "Blown Away!"
      I have opened a fixed deposit with Indusind bank. The customer services and response is good and they are offering a good rate of interest. The customer services and response is good. It was easy to open this account and there were no charges taken for the same.
      Was this review helpful? 8
      , bangalore
      Reviewed on Aug 17, 2018
    • Kotak Fixed Deposit
      "Easy process to open a FD"
      0.5 5.0/5 "Blown Away!"
      I also have a fixed deposit account with Kotak Mahindra Bank. The process to open this account is easy. I can do it online. They also offer a good rate of interest on the account. I get 7.5% on my deposited amount of 30K. There is a lock in period of one year.
      Was this review helpful? 16
      , new delhi
      Reviewed on Aug 02, 2018
    • Axis Bank Fixed Deposit
      "Very good service"
      0.5 5.0/5 "Blown Away!"
      I've another fixed deposit with the Axis bank under my wife's name. I've deposited 21 lacs in this deposit. The interest rate is good and they disburse the interest quarterly. So far there hasn't been any issues with their services.
      Was this review helpful? 21
      , ahmedabad
      Reviewed on Jul 28, 2018
    • Vijaya Bank Fixed Deposit
      "Good Service"
      0.5 4.0/5 "Great!"
      I've a fixed deposit with the Vijaya Bank. I deposited 2 Lacs, the interest rate is 7.6 %, the tenure of the FD is 2 years. Comparatively the interest ate is low. I never faced any issues with their services.
      Was this review helpful? 5
      , ahmedabad
      Reviewed on Jul 28, 2018
    • Axis Bank Fixed Deposit
      "Very good service"
      0.5 5.0/5 "Blown Away!"
      I've two fixed deposits with the Axis bank, one is under my name and the second one is under wife's name. I've deposited 7 lacs, the interest rate is very good. They disburse the cumulated interest quarterly and the tenure of the FD is 5 years.
      Was this review helpful? 3
      , ahmedabad
      Reviewed on Jul 28, 2018
    • HDFC Bank Fixed Deposit
      "Good service"
      0.5 4.0/5 "Great!"
      I had started making this investment almost a year back. The interest rate with them had changing according to the market rate. The services which they had been providing so far had been very good. Tenure with them also had been good and i make the deposits directly.
      Was this review helpful? 6
      , new delhi
      Reviewed on Jul 26, 2018
    • SBI Fixed Deposit
      "Good service"
      0.5 4.0/5 "Great!"
      I have taken fixed deposit account with state bank of India . I have chosen this bank . As they are offering good rate of interest which will good returns . Am satisfied with the premium amount which am paying . Am satisfied with customer service and response .
      Was this review helpful? 15
      , mumbai
      Reviewed on Jul 25, 2018
    • SBI Fixed Deposit
      "Needs to improve"
      0.5 2.0/5 "Expected more"
      I have a Fixed Deposit account with SBI from last 8 months, i am not happy with the services provided by SBI as their response is not proper and there was no complete information given. I paid an Fixed amount of Rs 1.5 lakhs and in return i get 6.5% as interest which is less when compared to others.
      Was this review helpful? 18
      , gurgaon
      Reviewed on Jul 20, 2018
    • Indian Bank Fixed Deposit
      "Good Service"
      0.5 4.0/5 "Great!"
      I opened a fixed deposit with the Indian Bank. The deposit amount is 25000 and the tenure is 20 years, 25000. The interest rate is competitive and I opened the FD at the Indian bank branch. After 20 years I'll receive the deposit amount plus the added interest.
      Was this review helpful? 11
      , chennai
      Reviewed on Jul 14, 2018
    • Union Bank of India Fixed Deposit
      "Highly poor net banking services"
      0.5 0.5/5 "Unacceptable"
      Even if a customer dies at hospital, he has to visit the branch to get the FD money from bank account. This is my personal experience. I am trying to get my FD money to my account thru net banking, but customer service is advising me to visit branch first.
      Was this review helpful? 12
      , noida
      Reviewed on Jul 06, 2018
    • Canara Bank Fixed Deposit
      "Good service"
      0.5 4.0/5 "Great!"
      I have my Fixed Deposit opened with Canara bank from last 6 months, i am happy with the services provided by Canara bank. I have deposited an amount of Rs 50000 as FD. Customer service is very good and they gave all the right information. I get 6.6% of interest as return on FD.
      Was this review helpful? 12
      , kolkata
      Reviewed on Jun 29, 2018
    • South Indian Bank Fixed Deposit
      "Good Service"
      0.5 5.0/5 "Blown Away!"
      I had a fixed deposit with the South Indian Bank. There is nothing special about the service. The interest they offer for the deposit is low. It is so easy to start a fixed deposit. Overall it has been a good experience with the fixed deposit. Staff were cooperative and very much helpful
      Was this review helpful? 1
      , mumbai
      Reviewed on Jun 27, 2018
    • Central Bank of India Fixed Deposit
      "Good Service"
      0.5 5.0/5 "Blown Away!"
      I deposited 50K as an FD in Central Bank of India. I haven't withdrawn the deposit and they provides annual interest for the FD. It was easy to start the FD and they also gave me a credit card based on the fixed deposit. Overall it has been a easy process opening FD with the Central Bank of India.
      Was this review helpful? 8
      , chennai
      Reviewed on Jun 25, 2018
    • review Fixed Deposit
      "FD with DBS"
      0.5 5.0/5 "Blown Away!"
      With DBS it was a hassle free experience. As for my fixed deposit the rate of interest which they are providing is 6.5% to 7%. There is no charges or penalty for the withdrawal with the maturity period.The interest will be estimated depend upon the tenure which we are choosing for.
      Was this review helpful? 2
      , mumbai
      Reviewed on Jun 25, 2018
    • YES Bank Fixed Deposit
      "Better"
      0.5 4.0/5 "Great!"
      I had the fixed deposit account with the Yes bank and the interest rate is around 8.5%, also the customer service is good too. I would like to say that the response is positive one with the Yes bank, also I am really happy with them till now.
      Was this review helpful? 10
      , hyderabad
      Reviewed on Jun 23, 2018
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