Simple & Compound Interest Calculator
Calculate simple interest and compound interest on investments and loans. Compare different compounding frequencies.
Simple Interest
₹40,000
SI Total Amount
₹1,40,000
Compound Interest
₹48,595
CI Total Amount
₹1,48,595
Extra Earnings (CI - SI)
₹8,595
Advantage %
21.49%
Simple Interest Formula
SI = 100000 × 8% × 5 = ₹40,000
Compound Interest Formula
CI = 100000 × (1 + 8/400)^(4×5) - 100000 = ₹48,595
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Simple Interest vs Compound Interest
Simple Interest (SI) is calculated only on the principal amount. The formula is SI = P × R × T / 100, where P is the principal, R is the rate, and T is the time period. Simple interest is rarely used in modern finance.
Compound Interest (CI) is calculated on the principal as well as on the previously earned interest. This causes the amount to grow exponentially. The formula is CI = P × (1 + R/(N×100))^(N×T), where N is the compounding frequency.
The power of compounding increases with more frequent compounding (annual, quarterly, monthly, daily). Even a small difference in compound interest can result in significant wealth creation over long periods.
The Rule of 72 is a quick way to estimate doubling time: divide 72 by the annual interest rate to get the approximate number of years it takes to double your money. For example, at 8% interest, your money doubles in roughly 72÷8 = 9 years.