Simple & Compound Interest Calculator

Simple vs Compound Interest

Simple Interest (SI) is interest calculated only on the original amount you invest or borrow. Compound Interest (CI) is interest calculated on the original amount plus any interest already earned, so it grows faster over time.

Use the tabs below to calculate either, and see how the two compare for the same principal, rate, and term.

Disclaimer : Enter numbers in your local currency — the calculation works the same regardless of currency.

SI Formula

Simple Interest = (P × r × t) ÷ 100

Where P = principal, r = annual interest rate, and t = time in years. The interest earned is the same for every year of the term.

SI Example

If Principal = 10,000, Rate = 8%, Term = 5 years:

Interest Earned = 4,000  |  Total Amount = 14,000

CI Formula

Total Amount = P × (1 + r ÷ n)n × t

Where P = principal, r = annual interest rate (as a decimal), n = number of compounding periods per year, and t = time in years. Interest Earned = Total Amount − P.

CI Example

If Principal = 10,000, Rate = 8%, Term = 5 years, compounded annually:

Interest Earned ≈ 4,693.28  |  Total Amount ≈ 14,693.28

Compare this to the Simple Interest example above — same principal, rate, and term, but 693.28 more earned simply because of compounding.

How SI & CI Connect to Your Other Calculators

Almost every other calculator on this site is really a variation of simple or compound interest applied to a real-world product.

  • FD / RD Calculator — Fixed and Recurring Deposits both use compound interest; this calculator explains the underlying maths behind those results.
  • CD Calculator and Fixed Savings Calculator — also compound interest products; compare compounding frequencies to see the effect on returns.
  • EMI Calculator — loan EMIs are built on compound interest principles, which is why more of your early payments go toward interest.
  • CAGR Calculator — CAGR measures the compound annual growth rate of an investment, extending the same compounding logic to variable-return assets.
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Frequently Asked Questions

Simple Interest is interest calculated only on the original principal amount, for the entire duration of the loan or deposit. The interest earned stays the same each year since it is never added back to the principal.

Compound Interest is interest calculated on the principal plus any interest already earned, so the amount you earn interest on grows over time. This is why compound interest produces a larger total than simple interest over the same period.

Simple interest is calculated only on the original principal, so it grows at a constant rate every period, while compound interest is calculated on the principal plus accumulated interest, so it grows faster over time. The longer the duration, the bigger the gap between the two becomes.

The more often interest compounds, such as monthly instead of annually, the more frequently interest gets added to the principal, which slightly increases the total return for the same stated annual rate.

Compound interest grows money faster than simple interest over the same rate and period, because each period's interest is calculated on a larger base. The difference is small in the short term but becomes significant over many years.

Simple interest is commonly used for short-term loans, car loans, and some personal loans, while compound interest is used for savings accounts, fixed deposits, credit cards, and most long-term investments. Knowing which type applies to a product helps you understand its true cost or return.