Interest Calculator
Calculate simple and compound interest. Compare both side-by-side with full breakdowns.
About this calculator
This calculator puts simple and compound interest side by side so you can see the difference for the same principal, rate and time. Enter the amount, the yearly rate, the years and how often interest compounds, and it shows both results and how much more compounding earns.
It is helpful when comparing a loan or deposit that quotes simple interest with one that compounds, or when you want to understand why long-term investing rewards patience.
How to use it
- Enter the Principal.
- Enter the Rate per annum and the Time in years.
- Choose the Compounding: yearly, half-yearly, quarterly or monthly.
- Press Calculate and compare the two boxes.
Both formulas
Simple: SI = P × r × t. Compound: A = P × (1 + r/n)n·t, with compound interest equal to A − P. The gap between them grows faster the longer the time and the higher the rate.
Worked example
₹1,00,000 at 8% for 3 years, compounded quarterly
| Simple interest | ₹24,000.00 |
| Compound interest | ₹26,824.18 |
| Difference | ₹2,824.18 |
Over 3 years compounding adds only ₹2,824. Over 20 years at the same rate it would add several lakhs.
Tips and common mistakes
- The longer the term, the more compounding matters.
- Check the compounding frequency of your deposit or loan.
- For loans on reducing balance, use the EMI calculator, which is more accurate.
- Use the tool to understand credit card interest, which compounds on unpaid balances.
- Round-trip check: a 2% difference in rate matters more than monthly versus quarterly compounding.
Frequently asked questions
What is the difference between simple and compound interest?
Compound interest is calculated on the principal and on accumulated interest. Simple interest uses only the principal.
Does more frequent compounding help?
It increases the amount slightly. The gain from quarterly to monthly is small.
Which should I use for a savings account?
Compound, because banks credit interest periodically and it earns further interest.
Which applies to credit cards?
Compound, often monthly, which is why unpaid balances grow quickly.
Can I use days for time?
Divide days by 365 and enter years.
How accurate is it for loans?
Loans on reducing balance are best modelled with the EMI calculator.