Finance Calculator
Interest Calculator
Calculate simple or compound interest for any principal amount, rate, and time period. See exactly how your money grows.
Simple vs Compound Interest: What's the Difference?
Interest is the cost of borrowing money, or the reward for saving it. The key distinction is whether interest is calculated on the original principal alone (simple) or on the growing balance including previously earned interest (compound).
Simple Interest Formula
I = P × r × t
Where P = Principal, r = Annual rate (decimal), t = Time in years.
Compound Interest Formula
A = P × (1 + r/n)^(n×t)
Where n = compounding frequency per year (12 for monthly, 4 for quarterly, etc.).
The Power of Compound Interest
Einstein reportedly called compound interest "the eighth wonder of the world." A ₹1,00,000 investment at 8% compounded annually for 20 years grows to ₹4,66,096 — that's ₹3,66,096 in interest alone.
Frequently Asked Questions
Which is better: simple or compound interest?
For savings and investments, compound interest is always better for the investor. For loans, compound interest means you pay more, so simple interest is preferable as a borrower.
What is the Rule of 72?
The Rule of 72 is a quick mental formula: divide 72 by your interest rate to estimate how many years it takes to double your money. At 8% annual return, money doubles in about 9 years (72/8=9).