How the simple interest calculator works
Simple interest is charged only on the original principal, for the entire time period — unlike compound interest, it never earns interest on previously accrued interest.
Interest = P × r × t / 100
Total amount = P + Interest
Total amount = P + Interest
Where P is the principal, r is the annual interest rate (%), and t is time in years.
Step-by-step guide
- Enter the principal amount.
- Set the annual interest rate.
- Choose the time period in years.
- Read the interest earned/payable and the total amount instantly.
Simple vs compound: a quick comparison
On ₹1,00,000 at 6% for 10 years: simple interest gives a flat ₹60,000 in interest every scenario, while compound interest (annual compounding) gives roughly ₹79,000 — the gap widens the longer the money is invested.
Frequently asked questions
Common examples include some short-term personal loans, certain bonds, and basic savings calculations. Most mortgages, mutual funds and long-term deposits use compound interest instead.
Simple interest grows linearly (the same amount each year) because it's always calculated on the original principal. Compound interest grows faster over time because each period's interest is added back into the base for the next calculation — see our Compound Interest Calculator.