1. What is the Compound Interest Formula?

The compound interest formula calculates the amount of interest earned on an investment where the interest is added to the principal at regular intervals, resulting in interest being earned on interest.

2. How Does the Calculator Work?

The calculator uses the compound interest formula:

Where:

• \( A \) — Final amount (INR)
• \( P \) — Principal amount (INR)
• \( R \) — Periodic interest rate (annual rate divided by compounding periods)
• \( N \) — Total number of compounding periods

Explanation: The formula accounts for the exponential growth of your investment as interest is compounded over time.

3. Importance of Compound Interest Calculation

Details: Understanding compound interest helps investors make informed decisions about fixed deposits and other investments, showing how money can grow over time.

4. Using the Calculator

Tips: Enter principal amount in INR, annual interest rate in percentage, investment period in years, and select compounding frequency. All values must be valid (principal > 0, rate > 0, years ≥ 1).

5. Frequently Asked Questions (FAQ)

Q1: What is the difference between simple and compound interest?
A: Simple interest is calculated only on the principal amount, while compound interest is calculated on the principal plus accumulated interest.

Q2: How does compounding frequency affect returns?
A: More frequent compounding (monthly vs annually) results in higher returns due to the interest-on-interest effect.

Q3: What are current HDFC fixed deposit rates?
A: Rates vary by tenure and customer type. Check HDFC's official website for current rates before investing.

Q4: Are there tax implications on fixed deposit interest?
A: Yes, interest earned is taxable as per your income tax slab. TDS may be deducted if interest exceeds ₹40,000 (₹50,000 for senior citizens).

Q5: Can I withdraw my fixed deposit before maturity?
A: Yes, but premature withdrawals may attract penalties and lower interest rates as per HDFC's terms.