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 allows savings to grow faster as you earn interest on interest.

2. How Does the Calculator Work?

The calculator uses the compound interest formula:

Where:

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

Explanation: The formula calculates how much your investment will grow when interest is compounded monthly.

3. Importance of Compound Interest

Details: Understanding compound interest helps in financial planning, showing how investments grow over time and the power of starting early.

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 typically compounds savings account interest quarterly, but this calculator uses monthly compounding for more precise results.

Q2: Are there any taxes on interest earned?
A: Yes, interest earned above ₹10,000 per year is taxable under Income Tax Act Section 80TTA.

Q3: What's the current interest rate for HDFC savings accounts?
A: As of 2023, HDFC offers 3.00-3.50% p.a. for savings accounts (rates may vary).

Q4: How does this compare to fixed deposits?
A: FDs typically offer higher rates (5-7% p.a.) but with less liquidity than savings accounts.

Q5: Can I use this for other banks?
A: Yes, the formula works for any bank's savings account if you know the interest rate.