Compound Interest Calculator

With compound interest, the interest earned in one period is added back to the principal, so the next period's interest is calculated on a larger base. This is fundamentally different from simple interest, where every period earns interest only on the original amount, regardless of how much interest has already accumulated.

The compounding frequency — annual, semi-annual, quarterly, monthly, or daily — determines how often that interest gets folded back into the principal. For the same nominal annual rate, more frequent compounding produces a slightly higher effective yield, because your money starts earning interest on interest sooner.

Enter your starting principal in PKR, the annual interest rate your bank or investment product offers, the number of years you plan to leave the money invested, and how often interest compounds. The calculator returns the future value of your principal along with the total interest earned over the period.

Try running the same principal and rate with monthly compounding versus annual compounding to see exactly how much extra the more frequent schedule adds over a five- or ten-year horizon — the gap is usually small in absolute terms for savings-account-style rates, but it grows more noticeable at higher rates or longer periods.

The formula is A = P x (1 + r/n)^(n x t), where A is the future value, P is the principal, r is the annual interest rate as a decimal, n is the number of compounding periods per year, and t is the time in years. Total interest earned is simply A minus P.

As either the rate, the time, or the compounding frequency increases, the exponent in this formula grows, which is why compound growth curves upward rather than following a straight line — the further out you look, the steeper the growth becomes.

Suppose you deposit PKR 500,000 into a savings product offering 11% annual interest, compounded monthly, for 10 years. Using the formula, the future value comes to roughly PKR 1,505,000, meaning total interest earned of about PKR 1,005,000 — more than doubling your original deposit.

Compare that with the same principal and rate compounded only annually: the future value would be slightly lower, around PKR 1,420,000, a difference of about PKR 85,000 purely from the compounding frequency. Now compare 10 years against 20 years at the same 11% monthly-compounded rate: the future value jumps to roughly PKR 4,530,000 — showing how dramatically the extra decade compounds the gains.

Do not assume every bank product quotes a true annual rate the same way; some advertise a nominal rate while others advertise an effective annual yield that already accounts for compounding. Always confirm which figure you are being given before entering it here.

Remember this calculator assumes a constant rate with no withdrawals and no additional deposits along the way. Real bank products may offer tiered rates that change with your balance, and profit rates on Islamic savings products can vary month to month rather than staying fixed for the full term.

Tax on interest income, where applicable, is not included in this projection. If withholding tax applies to your savings product, mentally reduce the effective rate before comparing it against other investment options.

If your product does not compound and instead pays a flat return on the original principal only, use the Simple Interest Calculator instead — the two produce noticeably different results over multi-year horizons at the same headline rate. For a one-time lump sum you plan to grow toward a specific goal, the Investment Calculator frames the same math around future value and expected return.

If you want to know how much of that future value will actually buy in real terms after rising prices, pair this page with the Inflation Calculator, and if you are saving specifically for retirement, the Retirement Calculator applies the same compounding logic to a longer, goal-based horizon.