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Interest Calculator

Calculate Simple & Compound Interest with Detailed Breakdown

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Interest Calculator

Understanding Interest Calculations

Simple Interest

Simple Interest is calculated only on the principal amount:

SI = P × R × T

Where:

  • P = Principal amount
  • R = Annual interest rate (in decimal)
  • T = Time (in years)
Compound Interest

Compound Interest is calculated on both principal and accumulated interest:

A = P(1 + r/n)^(nt)

Where:

  • A = Final amount
  • P = Principal amount
  • r = Annual interest rate (in decimal)
  • n = Number of times interest is compounded per year
  • t = Time (in years)

Frequently Asked Questions

Simple Interest is calculated only on the principal amount, while Compound Interest is calculated on both the principal and the accumulated interest from previous periods. This makes compound interest grow exponentially over time.

The more frequently interest is compounded, the higher the returns. For example, monthly compounding will yield more than annual compounding for the same principal, rate, and time period.

Compound interest has been called the "eighth wonder of the world" because it makes money grow exponentially. The earlier you start investing, the more time your money has to compound and grow.