Simple & Compound Interest Calculator

Simple interest

Simple interest is calculated only on the original principal: SI = P × R × T ÷ 100. ₹10,000 at 8% for 3 years earns ₹2,400, the same ₹800 every year. It’s used for some short-term loans, certain savings schemes that pay out interest, and many school maths problems.

Compound interest

Compound interest is calculated on the principal plus interest already earned: A = P × (1 + R/(100n))^nT, where n is the number of times interest is compounded per year. Compound interest = A − P. ₹10,000 at 8% compounded yearly for 3 years earns about ₹2,597, which is ₹197 more than simple interest.

Compounding frequency

The more often interest compounds, the more you earn (or owe): yearly < half-yearly < quarterly < monthly. Indian bank FDs usually compound quarterly; credit cards and some loans effectively compound monthly, which is why unpaid card balances grow so fast.

Exam tips

• For 2 years, the difference between CI and SI = P × (R/100)². A handy shortcut in competitive exams.
• For half-yearly compounding, halve the rate and double the time.
• Always check whether the question says “compounded annually” or another frequency.

Real-world calculators

For deposits, use the FD calculator or RD calculator; for loans, the EMI calculator; for investments, the SIP calculator.

Worked example

₹20,000 at 10% for 2 years. Simple interest = 20,000 × 10 × 2 ÷ 100 = ₹4,000. Compound interest (yearly) = 20,000 × 1.1² − 20,000 = ₹4,200. The difference is ₹200, which matches the shortcut P × (R/100)² = 20,000 × 0.01. With half-yearly compounding, the rate becomes 5% per half-year for 4 periods: 20,000 × 1.05⁴ − 20,000 ≈ ₹4,310.

Tip: for exam practice, calculate by hand first, then check your answer here. Change the compounding option to see how frequency affects the result.