Compare different interest types and see detailed results
Formula: Simple Interest = (Principal × Rate × Time) / 100
Formula: A = P(1 + r/n)nt where A = Amount, P = Principal, r = Rate, n = Compounding frequency, t = Time
Simple interest is calculated only on the original principal amount, while compound interest is calculated on the principal amount plus any accumulated interest from previous periods.
The more frequently interest is compounded, the more interest you will earn (or pay) over time. Daily compounding yields more than monthly, which yields more than yearly compounding.
Compound interest is generally better for investments as it allows your money to grow faster by earning interest on previously earned interest.
For monthly payments, use the monthly interest rate (annual rate divided by 12) and adjust the time period accordingly in the calculator.
Interest is the cost of borrowing money or the return on invested money. It's typically expressed as an annual percentage rate (APR) and can be calculated in different ways, primarily as simple interest or compound interest.
Simple interest is calculated only on the original principal amount throughout the entire period.
Simple Interest = (Principal × Rate × Time) / 100
Example: ₹10,000 at 5% for 3 years = (10000 × 5 × 3)/100 = ₹1,500
Compound interest is calculated on the initial principal and also on the accumulated interest of previous periods.
A = P(1 + r/n)nt
Where:
A = Final amount
P = Principal amount
r = Annual interest rate (decimal)
n = Number of compounding periods per year
t = Time in years
Example: ₹10,000 at 5% compounded annually for 3 years = 10000(1 + 0.05/1)1×3 = ₹11,576.25
| Aspect | Simple Interest | Compound Interest |
|---|---|---|
| Calculation Basis | Only on principal amount | Principal + accumulated interest |
| Growth | Linear growth | Exponential growth |
| Returns | Lower returns over time | Higher returns over time |
| Usage | Short-term loans, simple investments | Long-term investments, most loans |