Simple & Compound Interest Calculator
Calculate simple and compound interest side by side. Toggle between the two, pick a compounding frequency, and see maturity and interest earned.
Built & reviewed by Ankit Madia, Founder & Markets Trader
Simple Interest vs Compound Interest
Interest is the price of money. When you save or invest, interest is what you earn. When you borrow, it is what you pay. The two common ways to calculate it are simple interest and compound interest, and the difference between them decides how fast your money grows or how much a loan really costs.
Simple Interest Formula
Simple interest is charged only on the original principal, so it never changes from year to year.
SI = P × R × T / 100 and Maturity = P + SI
Here P is the principal, R is the annual interest rate in percent, and T is the time in years.
Compound Interest Formula
Compound interest is charged on the principal plus the interest already accumulated, so the base keeps growing.
Maturity = P × (1 + (R/100)/n)^(n × T) and CI = Maturity − P
The extra term n is the compounding frequency, that is how many times a year interest is added: 1 for yearly, 2 for half-yearly, 4 for quarterly, and 12 for monthly. A higher n means interest gets added more often, which pushes the maturity value up.
Worked Example (₹1,00,000 at 8% for 5 years)
Say you put ₹1,00,000 into a scheme paying 8% a year for 5 years.
With simple interest, SI = 100000 × 8 × 5 / 100 = ₹40,000, so you get back ₹1,40,000. The interest is a flat ₹8,000 every year.
With yearly compounding, Maturity = 100000 × (1.08)^5 = ₹1,46,933, so the interest works out to ₹46,933. That is about ₹6,933 more than the simple interest case, purely because each year's interest starts earning its own interest.
Switch to more frequent compounding (quarterly or monthly) and the maturity climbs a little higher again for the same 8% rate. That is why fixed deposits, PPF, and most savings products quote a compounding frequency, and why paying off a compounding loan early saves real money.