Simple and Compound Interest Calculator for Loans and Savings
Maturity value and interest on any principal, with yearly, half-yearly, quarterly or monthly compounding.
Maturity value
₹1,22,504.3
Compound interest on ₹1,00,000 at 7% for 3 years
Simple interest is charged only on the original principal throughout; compound interest is charged on principal plus interest already accrued, recalculated at each compounding period, which is why the same rate produces a larger maturity value under compounding.
About this tool
Interest shows up in a student's life from two directions. An education loan accrues interest from the first disbursement, usually at simple interest during the course and moratorium, and a fixed deposit or PPF account grows the money a family sets aside for fees, usually at compound interest. The same rate behaves differently in the two cases, and the gap widens with time.
This calculator shows both. Enter a principal, an annual rate and a period in years, then switch between simple and compound interest. Under compound interest you also pick how often interest is added, from yearly to monthly. The result gives the interest earned or charged and the maturity value.
It is also a quick way to check answers in the simple and compound interest chapter of SSC CGL, bank PO and railway aptitude papers, since it uses the same textbook formulas.
How to use the interest calculator
- Choose Simple interest or Compound interest at the top.
- Enter the principal in rupees, such as the loan amount or the deposit.
- Enter the annual interest rate as a percentage, for example 7 for 7% per year.
- Enter the period in years, using decimals for part years, so 18 months is 1.5.
- Under compound interest, pick the compounding frequency that matches the product.
- Read the maturity value and the interest figure in the breakdown panel.
How simple and compound interest are calculated
Simple interest is charged on the original principal for the whole period. Interest is principal times rate times years divided by 100, and the maturity value is principal plus that interest.
Compound interest adds the interest to the principal at the end of each compounding period, so later periods earn interest on earlier interest. The maturity value is principal multiplied by (1 + rate ÷ (100 × n)) raised to the power n × years, where n is the number of periods per year.
- Simple interest: P × R × T ÷ 100
- Compound maturity: P × (1 + R ÷ (100 × n)) ^ (n × T)
- n: 1 for yearly, 2 for half-yearly, 4 for quarterly, 12 for monthly
- P must be above zero, T must be above zero, and R can be zero or more
- Defaults when the page opens: ₹1,00,000 at 7% for 3 years, compounded yearly
- Results are rounded to two decimal places for display only
Worked example at 7% for three years
Hypothetical: ₹1,00,000 at 7% per year for 3 years. Under simple interest the tool computes 1,00,000 × 7 × 3 ÷ 100 = ₹21,000, for a maturity value of ₹1,21,000. Under compound interest with yearly compounding it computes 1,00,000 × 1.07 ^ 3 = 1,00,000 × 1.225043 = ₹1,22,504.30, so the interest is ₹22,504.30.
Switching the frequency changes the per-period rate and the exponent. Half-yearly uses 3.5% for 6 periods, quarterly 1.75% for 12, and monthly 0.5833% for 36. Each step up adds a little to the maturity value, with diminishing gains.
| Mode | Working | Interest | Maturity value |
|---|---|---|---|
| Simple | 1,00,000 × 7 × 3 ÷ 100 | ₹21,000.00 | ₹1,21,000.00 |
| Compound, yearly | 1,00,000 × 1.07 ^ 3 | ₹22,504.30 | ₹1,22,504.30 |
| Compound, half-yearly | 1,00,000 × 1.035 ^ 6 | ₹22,925.53 | ₹1,22,925.53 |
| Compound, quarterly | 1,00,000 × 1.0175 ^ 12 | ₹23,143.93 | ₹1,23,143.93 |
| Compound, monthly | 1,00,000 × (1 + 0.07 ÷ 12) ^ 36 | ₹23,292.56 | ₹1,23,292.56 |
Education loan and deposit comparisons
Hypothetical: a ₹5,00,000 education loan at 9.5% where the bank applies simple interest for a four-year course and moratorium. The tool gives 5,00,000 × 9.5 × 4 ÷ 100 = ₹1,90,000 of accrued interest, so repayment would start on roughly ₹6,90,000 if none of it is paid during the course. Many public-sector schemes work this way; check the sanction letter.
Hypothetical: ₹1,50,000 left in a PPF-style account at 7.1% compounded yearly for 15 years becomes 1,50,000 × 1.071 ^ 15 = ₹4,19,694.54, an interest of ₹2,69,694.54. This models a single deposit left untouched. A real PPF account takes a fresh deposit every year, which the tool does not model.
Common mistakes
- Entering a monthly rate in the annual rate field. A loan quoted at 1% per month is 12% per year for this tool.
- Typing months in the years field. Enter 6 months as 0.5 and 30 months as 2.5.
- Picking the wrong compounding frequency. Bank fixed deposits are usually compounded quarterly, while PPF is compounded yearly; check the product's terms.
- Expecting an EMI. The tool reports the total interest and maturity value, not a monthly instalment, which needs the EMI formula.
- Treating a simple-interest loan and a compound-interest deposit at the same rate as equal. The table above shows the gap even over three years.
Accuracy and limitations
The formulas are the standard ones used in textbooks and bank disclosures, and the arithmetic is exact to the paisa before rounding. The tool leaves out everything a real account adds on top, such as tax deducted at source on deposit interest, premature withdrawal penalties, rate resets on floating-rate loans and processing fees.
It models a single lump sum. Recurring deposits, yearly PPF contributions and loans disbursed in instalments each need their own schedule. For those, run the tool once per instalment with the period that instalment is actually invested or borrowed for, and add the results.
Interest rates on government small-savings schemes are notified quarterly and bank rates change with policy, so take the rate from the current notification or the bank's rate card rather than from any example on this page.
Frequently asked questions
›Which compounding frequency should I choose for a bank fixed deposit?
Most Indian banks compound fixed-deposit interest quarterly, so pick Quarterly unless the deposit receipt or the bank's terms say otherwise. Deposits that pay interest out monthly rather than reinvesting it are closer to simple interest from the depositor's point of view. Post office time deposits and PPF are compounded yearly as per their scheme rules, so use Yearly for those.
›Is education loan interest simple or compound?
During the course and the moratorium most public-sector education loan schemes charge simple interest on the amount disbursed, and that accrued interest is then added to the principal when EMIs begin. After that point the loan behaves like any term loan with monthly reducing-balance interest. Use the simple mode for the moratorium period and an EMI calculator for the repayment phase; the sanction letter states which applies.
›How do I enter a period of 18 months or 45 days?
The period field is in years and accepts decimals, so 18 months is 1.5 and 9 months is 0.75. For a period in days, divide by 365, which makes 45 days about 0.1233. Many banks compute short-period interest on actual days over 365, so the result will be close but can differ by a few rupees from a bank's own statement.
›Why does monthly compounding give more than yearly compounding at the same rate?
Because interest starts earning interest sooner. With monthly compounding, the interest credited at the end of month one is part of the balance for month two, and so on. The per-period rate is smaller, but there are more periods, and the exponent grows faster than the base shrinks. In the ₹1,00,000 example at 7% for 3 years, the gain from yearly to monthly is ₹788.26, a small but real amount.
›Can this calculator work out my loan EMI?
No. It gives total interest and maturity value for a lump sum over a period, which suits a moratorium-period estimate or a deposit. An EMI depends on the reducing balance each month and uses a different formula. For the repayment phase of an education, personal or home loan, use a dedicated EMI calculator with the same principal and rate and the tenure in months.
›Can I use it to check SSC or bank exam questions on simple and compound interest?
Yes, for questions that fit the standard formulas. A question asking for the compound interest on ₹8,000 at 5% for 2 years compounded annually is entered as 8000, 5, 2 and Yearly, which gives ₹820. Questions that ask for the rate or the time given the interest need algebra, and questions on installments or differences between CI and SI for specific years are better done by hand with the tool as a check.