Simple Interest & Compound Interest Calculator

Simple Interest Formula

Simple Interest = Principal × Annual Rate × Time ÷ 100

Simple interest is calculated on the original principal amount throughout the selected period.

Compound Interest Formula

A = P × (1 + r/n)^nt

Here, P is the principal, r is the annual rate expressed as a decimal, n is the number of compounding periods per year, and t is the time in years. Compound interest is the final amount minus the principal.

Example

For ₹10,000 at 10% annually over two years:

• Simple interest: ₹2,000; total: ₹12,000.
• Compound interest, compounded yearly: ₹2,100; total: ₹12,100.

How to Use the Interest Calculator

This free interest calculator helps you estimate interest on savings, deposits or loans. Enter the principal amount, annual interest rate and duration, then choose simple interest or compound interest.

What Is Simple Interest?

Simple interest is calculated on the original principal amount throughout the selected period. It does not add previously earned interest to the principal for future interest calculations.

Formula: Simple Interest = Principal × Annual Rate × Time ÷ 100

Example: If you deposit ₹10,000 at 10% simple interest per year for 2 years, the interest is ₹2,000 and the total amount is ₹12,000.

What Is Compound Interest?

Compound interest is calculated on the principal plus the interest accumulated in earlier compounding periods. The result depends on the annual rate, duration and compounding frequency.

Formula: A = P × (1 + r/n)^nt

In this formula, P is the principal, r is the annual interest rate expressed as a decimal, n is the number of compounding periods per year, t is the duration in years, and A is the final amount.

Example: ₹10,000 at 10% per year, compounded annually for 2 years, grows to ₹12,100. The compound interest is ₹2,100.

Simple Interest vs Compound Interest

Simple interest uses the original principal for every period. Compound interest includes accumulated interest when calculating interest in later periods. For the same positive rate and period, compounding generally produces a higher total than simple interest.

For example, on ₹10,000 at 10% annually for 2 years, simple interest is ₹2,000, while annual compound interest is ₹2,100.

What Is Compounding Frequency?

• Yearly: Interest is compounded once per year.
• Half-yearly: Interest is compounded twice per year.
• Quarterly: Interest is compounded four times per year.
• Monthly: Interest is compounded twelve times per year.

For the same nominal annual rate and duration, more frequent compounding generally increases the calculated amount when the rate is positive.

Frequently Asked Questions

What is the difference between principal and interest?

Principal is the original amount deposited or borrowed. Interest is the amount earned on savings or charged on borrowing.

Does a higher interest rate increase the total amount?

Generally, yes. With the principal and duration unchanged, a higher positive rate produces more interest under the same calculation method.

Does this calculator show the exact return on a bank deposit?

It provides an estimate based on the inputs entered. Actual deposit returns may depend on the bank's compounding rules, deposit terms, taxes and any applicable penalties or adjustments.

Can I use this calculator for loan interest?

You can estimate interest using a principal, annual rate and time period. However, this tool does not calculate loan instalments or amortisation schedules. Actual loan interest may depend on the outstanding balance, repayments, fees and lender-specific terms.