Interest Calculator
Simple interest grows at a flat rate on the original principal only, while compound interest earns interest on the interest already accumulated, so it grows faster the longer money stays invested. This calculator computes either on a one-time lump sum, so you can see the total amount and interest earned for a fixed principal, rate and time period.
How to use the interest calculator
- Enter the principal (lump sum) amount, the annual interest rate, and the number of years.
- Choose simple or compound interest.
- For compound interest, choose how often it compounds — more frequent compounding gives slightly more growth.
- Read the total interest earned and the final amount.
Formula
Simple interest: SI = P × R × T ÷ 100, Total = P + SI.
Compound interest: A = P × (1 + r ÷ (100 × n))n × T, where P is the principal, r the annual rate, n the number of compounds per year, and T the years. Interest earned = A − P.
Worked examples
Simple interest
₹1,00,000 at 7% simple interest for 5 years: SI = 1,00,000 × 7 × 5 ÷ 100 = ₹35,000, so the total is ₹1,35,000.
Compound interest, annual
₹1,00,000 at 7% compounded annually for 5 years grows to about ₹1,40,255 — about ₹5,255 more than simple interest over the same period, purely from compounding.
The Rule of 72, and how common India savings instruments compare
A quick way to estimate how long money takes to double at compound interest, without a calculator: divide 72 by the annual rate. At 7%, that's 72 ÷ 7 ≈ 10.3 years. At 9%, it's about 8 years. This "Rule of 72" is an approximation, not an exact formula, but it's accurate enough for quick mental comparisons.
For context, here is roughly where common India savings instruments have sat in recent years (rates change over time and vary by bank/scheme, so always check the current rate before deciding):
| Instrument | Typical annual rate range | Compounding |
|---|---|---|
| Savings bank account | ~2.5–4% | Quarterly |
| Fixed Deposit (FD) | ~6–7.5% | Quarterly (typically) |
| Public Provident Fund (PPF) | ~7–8% | Annually |
| Recurring Deposit (RD) | ~6–7% | Quarterly (typically) |
This table is for general educational context only, not a recommendation — always check the current official rate from the bank or institution before making a decision, since these change over time.
Common mistakes to avoid
- Using simple interest math on a compound-interest product (like a fixed deposit) — most bank deposits and investments compound, so simple interest usually understates the real return.
- Forgetting that more frequent compounding (monthly vs annually) gives a higher effective rate even at the same stated annual rate.
- Not accounting for tax on interest earned, which reduces the real return below the figure shown here.
Frequently asked questions
What is the difference between simple and compound interest?
Simple interest is calculated only on the original principal every period. Compound interest is calculated on the principal plus all interest earned so far, so the amount grows faster over time.
Does compounding frequency matter much?
It has a real but usually modest effect — monthly compounding at 7% grows a bit faster than annual compounding at the same stated rate, with the gap widening over longer time periods.
Which is better for a saver: simple or compound?
Compound interest earns more for a saver or investor at the same stated rate — this is why long-term investments (like PPF, FDs and mutual funds) generally compound rather than use simple interest.
Is this the same as the SIP calculator?
No — this calculator is for a single lump-sum deposit. Use the SIP calculator for regular monthly investments instead.
Reviewed September 29, 2026 by the CalcSolver editorial team. Found a mistake? Tell us; see our editorial policy.