1. What is the Compound Interest Formula?

The compound interest formula calculates how much your savings will grow over time when interest is earned on both the principal and accumulated interest. This is how HDFC savings accounts calculate interest.

2. How Does the Calculator Work?

The calculator uses the compound interest formula:

Where:

• \( P \) — Principal amount (initial deposit in INR)
• \( R \) — Monthly interest rate (annual rate divided by 12, as decimal)
• \( N \) — Number of compounding periods (months)
• \( A \) — Final amount after interest (INR)

Explanation: The formula accounts for exponential growth of your money as interest is compounded monthly.

3. Importance of Interest Calculation

Details: Understanding how your savings grow helps with financial planning and comparing different savings options.

4. Using the Calculator

Tips: Enter principal amount in INR, annual interest rate in percentage, and investment period in months. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How often is interest compounded in HDFC savings accounts?
A: HDFC compounds interest on savings accounts quarterly (every 3 months).

Q2: What is the current interest rate for HDFC savings accounts?
A: As of 2023, HDFC offers 3.5% p.a. for balances below ₹50 lakh and 4% p.a. for balances above ₹50 lakh.

Q3: Are there any taxes on savings account interest?
A: Yes, interest exceeding ₹10,000 per year is taxable under Income Tax Act.

Q4: How does this differ from fixed deposit interest?
A: FDs typically offer higher rates but lock your money for a fixed term, while savings accounts provide liquidity.

Q5: Can I use this for other banks' savings accounts?
A: Yes, the formula is universal, but you should use the specific interest rate offered by each bank.