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Use this compound interest calculator to estimate how your money may grow over time when interest is added back to the balance. It can help with savings planning, investment comparisons and general financial forecasting by showing the total amount, compound interest earned and the impact of compounding frequency.
Formula used: A = P (1 + r/n)^(n × t)
Compound interest is the process of calculating interest on both the original principal and the interest already earned in previous periods. This is why it is often described as interest on interest.
Over time, compound interest can grow a balance faster than simple interest, especially when the investment lasts longer or compounds more frequently.
This calculator estimates the final amount by using four main inputs: principal, annual interest rate, time period and compounding frequency.
A = P (1 + r/n)^(n × t)
Where:
Compound interest is then calculated as: Compound Interest = Final Amount − Principal
Suppose you invest PKR 100,000 at an annual interest rate of 10% for 2 years, compounded yearly.
A = 100,000 × (1 + 0.10 / 1)^(1 × 2)
A = 100,000 × (1.10)^2
A = PKR 121,000
Compound interest = PKR 121,000 − PKR 100,000 = PKR 21,000
The frequency of compounding affects how often interest is added to the balance. If interest is compounded monthly instead of yearly, the balance grows slightly faster because the earned interest starts generating additional interest sooner.
This is why two investments with the same rate and time period can still produce slightly different final amounts if the compounding schedule is different.
This calculator gives a mathematical estimate using the stated formula. Real financial products may include taxes, fees, penalties, minimum balance rules, changing rates, contribution schedules or institution-specific methods that affect the final outcome.
That means the result is best used for planning, comparison and general understanding. For actual investment or loan decisions, review the product terms and confirm with the relevant bank or financial institution where needed.
Disclaimer: This calculator is provided for informational and planning purposes only. Results are estimates and may differ from actual bank, investment or lending product calculations.