When is simple interest used?

Short-term personal loans, some car loans, and most exam math problems. Real bank products in India almost always use compound interest.

Does compounding frequency matter much?

Yes, but with diminishing returns. Monthly vs quarterly compounding at the same rate gives a slightly higher effective yield, but the gap shrinks quickly past monthly.

What's the effective annual rate?

Effective rate = (1 + r/n)^n − 1. For example, 12% nominal compounded monthly works out to ~12.68% effective.

Interest earned on most deposits is taxable as 'income from other sources'. Tax-free exceptions include PPF, EPF and certain tax-free bonds.

Finance

Simple & Compound Interest Calculator

Switch between simple and compound interest. Set principal, rate, time and compounding frequency to see the result.

Interest type

Principal

₹

₹ 0₹ 1,00,00,000

Annual rate

0%30%

Time

yrs

1 yrs40 yrs

Compounding frequency

Total amount

₹1,48,595

Principal: ₹1,00,000
Interest: ₹48,595

What is Simple & Compound Interest?

Simple interest is charged only on the original principal. Compound interest is charged on principal plus previously accrued interest — so it grows faster over time. Most real-world deposits and loans use compound interest.

Formula

Simple interest:
  A = P + (P × R × T / 100)

Compound interest:
  A = P × (1 + r/n)^(n × t)

P = principal,  R/r = annual rate,
T/t = years,  n = compounds per year

How to use this calculator

Pick simple or compound, enter principal, annual rate and time. For compound interest, set how often interest is added back to the principal (most Indian banks use quarterly for FDs and daily for savings).