1. What is Compound Interest?

Compound interest is the interest calculated on the initial principal and also on the accumulated interest of previous periods. It's a powerful concept in finance where your money grows exponentially over time.

2. How Does the Calculator Work?

The calculator uses the compound interest formula:

Where:

• \( A \) — Final amount including interest (INR)
• \( P \) — Principal investment amount (INR)
• \( R \) — Monthly interest rate (annual rate / 12 / 100)
• \( N \) — Number of compounding periods (months)

Explanation: The formula accounts for exponential growth of your investment through periodic compounding of interest.

3. Importance of Compound Interest

Details: Understanding compound interest helps in financial planning, investment decisions, and appreciating how savings can grow over time in HDFC Bank products.

4. Using the Calculator

Tips: Enter principal amount in INR, annual interest rate in percentage, time period in years, and select compounding frequency. All values must be positive.

5. Frequently Asked Questions (FAQ)

Q1: How does compounding frequency affect returns?
A: More frequent compounding (monthly vs annually) results in higher returns due to interest being calculated on interest more often.

Q2: What are typical interest rates for HDFC Bank products?
A: Rates vary by product (FDs, RDs, savings accounts) and tenure, typically ranging from 3% to 7% for retail customers.

Q3: Is this calculator specific to HDFC Bank?
A: While branded for HDFC, the compound interest formula applies universally. Actual HDFC product terms may vary.

Q4: Are there tax implications on compound interest?
A: Yes, interest income is taxable as per your income tax slab, though some products like tax-saving FDs have specific rules.

Q5: How accurate is this calculator?
A: It provides theoretical results. Actual returns may differ due to changing interest rates, fees, or product-specific terms.