🏧 Interest Calculator
Calculate and compare simple interest vs compound interest. See the power of compounding with year-wise breakdowns.
Interest Summary
Compound Interest Maturity
₹1,48,595
Interest: ₹48,595
Simple Interest Maturity
₹1,40,000
Interest: ₹40,000
Compounding Advantage
₹8,595
📋 Year-wise Breakdown
| Year | SI Interest | SI Total | CI Interest | CI Total | Difference |
|---|---|---|---|---|---|
| 1 | ₹8,000 | ₹1,08,000 | ₹8,243 | ₹1,08,243 | ₹243 |
| 2 | ₹8,000 | ₹1,16,000 | ₹8,923 | ₹1,17,166 | ₹1,166 |
| 3 | ₹8,000 | ₹1,24,000 | ₹9,658 | ₹1,26,824 | ₹2,824 |
| 4 | ₹8,000 | ₹1,32,000 | ₹10,454 | ₹1,37,279 | ₹5,279 |
| 5 | ₹8,000 | ₹1,40,000 | ₹11,316 | ₹1,48,595 | ₹8,595 |
Frequently Asked Questions
What is simple interest?
Simple interest is calculated only on the original principal amount. Formula: SI = P × R × T / 100. The interest remains the same every year.
What is compound interest?
Compound interest is calculated on the principal plus accumulated interest. Interest earns interest, leading to exponential growth over time. Most bank FDs and investments use compound interest.
What is compounding frequency?
Compounding frequency is how often interest is calculated and added to the principal. Higher frequency (monthly > quarterly > yearly) results in more interest due to more frequent compounding.
Which banks use simple vs compound interest?
Most savings accounts and FDs use compound interest. Simple interest is typically used for short-term personal loans, car loans, and some government schemes.
How does compounding frequency affect returns?
More frequent compounding gives higher returns. For ₹1,00,000 at 10% for 5 years: Annual compounding gives ₹1,61,051 while monthly compounding gives ₹1,64,531 — a difference of ₹3,480.
What is the Rule of 72?
The Rule of 72 is a quick way to estimate how long it takes to double your money. Divide 72 by the annual interest rate. At 12% returns, your money doubles in approximately 72/12 = 6 years.