What is simple interest?

Simple interest is interest calculated only on the principal amount. It does not compound; the interest each year is the same (I = P × r × t).

Where is simple interest used?

Simple interest is used in some loans, short-term deposits, and when the terms explicitly state simple interest. Most bank FDs use compound interest.

Simple vs compound interest – which is better for savings?

Compound interest gives higher returns for the same rate and tenure because interest is reinvested. For savings and FDs, compound interest is typically used.

Simple Interest Calculator

Calculate simple interest on a principal amount. Enter principal, annual rate and time in years. Interest = Principal × Rate × Time. No compounding.

Calculate Simple Interest

Principal (₹)

Annual rate (%)

Time (years)

Simple interest formula

I = P × r × t and A = P + I

I = Interest, P = Principal, r = Annual rate (decimal), t = Time in years. A = Total amount (Principal + Interest).

Example

₹1,00,000 at 6% for 5 years: I = 1,00,000 × 0.06 × 5 = ₹30,000. Total = ₹1,30,000.

FAQs

Key Terms

Maturity amount: Final value received at deposit end: principal plus accumulated interest.
Compounding: Interest earned on both principal and previously earned interest.
Annualized rate: Interest rate quoted for one year; converted internally for period-wise calculations.

Benefits of This Calculator

Quickly compare tenure and rate combinations before locking deposits.
Understand maturity, principal, and interest split through chart-style outputs.
Use formula and FAQ context to validate bank app numbers confidently.