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Simple Interest Calculator

Work out simple interest on any amount, and see how much more the same money earns with compound interest.

Simple interest ₹0
Total amount ₹0
Interest if compounded yearly ₹0

This is a plain arithmetic illustration before any tax. Banks may count actual days, so a bank's figure can differ slightly.

How this is calculated

Simple interest = principal × rate × time ÷ 100. The interest is the same every year, because it is always worked out on the original amount. The comparison line compounds the same rate once a year, so you can see what compounding adds.

A worked example

Illustration: 1 lakh rupees at 7% a year.

  • For 3 years, simple interest is ₹21,000, so the total is ₹1,21,000.
  • For 5 years, simple interest is ₹35,000; compounded yearly, it would be about ₹40,255.
  • For 10 years, simple interest is ₹70,000; compounded yearly, about ₹96,715.

The longer the time, the bigger the gap. For compound growth with your own compounding choice, use the compound interest calculator.

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Questions people ask

What is the simple interest formula?

Simple interest = principal × rate × time ÷ 100, where the rate is a yearly percentage and the time is in years. For example, 1 lakh rupees at 7% a year for 3 years earns 1,00,000 × 7 × 3 ÷ 100 = ₹21,000 of interest.

What is the difference between simple and compound interest?

Simple interest is worked out only on the original amount. Compound interest is also worked out on the interest already earned, so it grows faster over time. In the illustration on this page, 1 lakh rupees at 7% for 10 years earns ₹70,000 as simple interest but about ₹96,715 when compounded yearly.

Where is simple interest used in India?

Some short bank deposits pay simple interest, and many deposits that pay interest out every month or quarter work like simple interest, because the interest is paid to you instead of being added back. Informal loans between people are often quoted as simple interest per month, which can hide a high yearly rate.

Is a flat-rate loan the same as simple interest?

Close. A flat rate charges interest on the full loan for the whole term, even as you repay it, much like simple interest on the original amount. That makes the real cost much higher than the quoted rate. Ask the lender for the APR in the Key Facts Statement.

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