Simple and Compound Interest Calculator

Simple Interest
Compound Interest
Principal Amount (₹)
Please enter a valid amount
Interest Rate (% per annum)
Please enter a valid rate
Time Period
Please enter a valid time period
Total Amount
₹0
Principal Amount
₹0
Total Interest
₹0
Interest Rate
0%
Time Period
2 Years

What is a Simple Interest Calculator?

A simple interest calculator is an online tool that helps you quickly determine the interest accrued on loans or investments without compounding. It calculates the interest based on the principal amount, interest rate, and time period. You can use it to calculate interest on a daily, monthly, or yearly basis. The calculator typically asks for the principal amount, the annual interest rate, and the time duration in days, months, or years. Once you input the data, the calculator will display the interest and total amount, including both principal and interest.

How Does a Simple Interest Calculator Work?

The simple interest calculator works by applying the formula:

A = P (1 + rt)

Where:

  • A = Total Accrued Amount (principal + interest)
  • P = Principal Amount
  • r = Interest Rate
  • t = Time Period (in years)

The interest is then calculated by subtracting the principal from the total accrued amount:
Interest = A – P

For example, if the principal is Rs 10,000, the interest rate is 10%, and the time period is 6 years, the calculation would be:
A = 10,000 * (1 + 0.1 * 6) = Rs 16,000
Interest = A – P = 16,000 – 10,000 = Rs 6,000

What is a Compound Interest Calculator?

A compound interest calculator is an online tool that helps you determine the interest accrued on loans or investments that compound over time. Unlike simple interest, compound interest is calculated on both the initial principal and the accumulated interest from previous periods. The calculator allows you to input the principal amount, interest rate, number of compounding periods (such as annually, quarterly, or monthly), and the time duration. It then calculates the total value of the investment or loan, including both the principal and the compounded interest.

How Does a Compound Interest Calculator Work?

The compound interest calculator uses the following formula:

A = P (1 + r/n)^(nt)

Where:

  • A = Total Accrued Amount (Principal + Compound Interest)
  • P = Principal Amount
  • r = Annual Interest Rate (as a decimal)
  • n = Number of times interest is compounded per year
  • t = Time Period (in years)

The calculator works by applying the formula to compute the total amount that accumulates over the specified time. It takes into account the compounding effect, where interest is added to the principal, and the next interest calculation includes this accumulated interest.

For example, if the principal amount is Rs 10,000, the annual interest rate is 5%, the interest compounds quarterly, and the time is 3 years, the calculation would be:

A = 10,000 * (1 + 0.05/4)^(4*3) = Rs 11,576.25

The interest is the total amount minus the principal:
Interest = A – P = 11,576.25 – 10,000 = Rs 1,576.25