Simple interest formula
Simple Interest = Principal x Rate x Time. It is easier to understand but does not capture interest-on-interest growth.
Basic Finance
Simple Interest and Compound Interest Calculator
Compare simple interest and compound interest for loans, deposits, and savings scenarios.
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Enter calculator inputs
Use realistic values to generate a quick estimate.
Before you calculate
- Use simple interest for flat, principal-only interest calculations.
- Use compound interest for deposits and investments where interest earns interest.
- Higher compounding frequency increases the final amount slightly.
Simple Interest vs Compound Interest
Simple interest grows only on the original principal, while compound interest grows on principal plus accumulated interest. Over long periods, compounding creates a much larger difference.
Compound interest formula
Compound Amount = Principal x (1 + rate / frequency) ^ (frequency x years). This is closer to how many deposits and investments grow.
Use realistic inputs
A calculator is most useful when the inputs match your real documents, bank statements, salary slips, policy schedules, or loan sanction terms. Re-run the calculation with conservative and optimistic assumptions before making a money decision.
Compare scenarios before deciding
Change one input at a time to see what actually drives the result. This helps you identify whether the decision is sensitive to rate, tenure, age, cost, deductions, or transaction charges.
Frequently Asked Questions
Which is better, simple or compound interest?
For investors, compound interest is better because interest also earns returns. For borrowers, simple interest is cheaper than compounding.
What does quarterly compounding mean?
Quarterly compounding means interest is added four times a year, and each later quarter earns interest on the updated balance.