Interest Calculator
Quickly calculate Simple or Compound Interest on your investments or loans.
Simple and Compound Interest
Simple interest applies only to the original principal. Compound interest applies to principal plus accumulated interest, which accelerates growth over long periods. Indian bank FDs, PPF crediting, and most deposits use compounding; some short loans quote simple interest in marketing.
How to use this calculator
Pick simple or compound mode based on the product. Simple interest fits quick mental math and some short-term schemes. Compound interest matches bank FDs, PPF, and long-term investment CAGR comparisons.
Enter principal, annual rate, and tenure. For compound mode, pick frequency: quarterly for most bank FDs, annual for PPF crediting, monthly for some NBFC products.
Use the Rule of 72 for a quick estimate: divide 72 by the rate to approximate years to double. At 8% compounding, doubling takes about 9 years. Loan EMI tools use reducing balance separately from this calculator.
When a brochure quotes flat rate on a personal loan, convert to reducing balance APR before comparing with FD or PPF returns. Flat rate marketing numbers understate true borrowing cost.
Simple vs compound formulas
Simple interest: SI = P × R × T / 100 Amount = P + SI Compound amount: A = P × (1 + r/n)^(n×t) Example: ₹2 lakh at 8% for 5 years compounded quarterly (n=4). A ≈ ₹2.97 lakh, interest ≈ ₹97,000. Same ₹2 lakh at 8% simple interest for 5 years gives only ₹2.8 lakh. Compounding frequency and tenure both matter.
Frequently Asked Questions
Savings account: simple or compound?
Most Indian savings accounts calculate daily balance interest and credit quarterly, which effectively compounds.
Rule of 72?
Divide 72 by the annual rate to estimate years to double your money at that rate.
Which loans use reducing balance?
Home, personal, and car loans in India usually charge monthly reducing balance even though EMI stays flat.
Credit card interest?
Unpaid balances can face monthly interest above 3%, which compounds to effective annual rates often exceeding 40%.
Flat vs reducing balance?
Flat rate charges interest on original principal for full tenure. Reducing balance charges only on outstanding principal, which is what most bank loans use.
Which deposits use simple interest?
Some short corporate deposits and informal loans quote simple interest. Confirm before comparing with this tool.
Why compound interest grows faster?
Each period earns interest on prior interest. Over 10 to 15 years the gap versus simple interest becomes large at the same headline rate.
Continuous compounding?
Some academic formulas use continuous compounding, but Indian retail products use discrete quarterly or monthly compounding. Pick the frequency that matches your product.
Compare FD with RD using this tool?
Run compound mode for a one-time FD. RD math needs a separate recurring deposit calculator because each instalment earns for a different duration.
Negative interest possible?
Simple interest on deposits stays positive at quoted rates. Real returns can turn negative after tax and inflation even when nominal interest is positive.
Gold loan vs personal loan interest?
Gold loans are secured and often quote lower rates than unsecured personal loans because collateral reduces lender risk.
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