Simple & Compound Interest Calculator
Enter a principal amount, interest rate, time period, and compounding frequency to compare simple and compound interest side by side, with a year-wise breakdown of how each one grows.
₹10,000 at 10% for 2 years (compounded quarterly) grows to ₹12,184.03 — ₹184.03 more than simple interest's ₹12,000.00.
Year-wise growth
| Year | Simple interest amount | Compound interest amount |
|---|
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Simple interest vs compound interest
Simple interest is calculated only on the original principal, every
period, using interest = P × r × t / 100. Compound
interest is calculated on the principal plus any interest already
earned, so it grows faster the more frequently it compounds, using
amount = P × (1 + r / (100k))kt, where
k is the number of compounding periods per year (1 = annually,
2 = semi-annually, 4 = quarterly, 12 = monthly) and t is time
in years. The interest earned is simply the maturity amount minus the
original principal.
Worked examples
Example 1: ₹10,000 invested at 10% annual interest for 2 years, compounded quarterly (k=4). Simple interest = 10,000 × 10 × 2 / 100 = ₹2,000, maturity = ₹12,000.00. Compound interest = 10,000 × (1 + 0.10/4)⁴ − 10,000 = ₹2,184.03, maturity = ₹12,184.03 — ₹184.03 more than simple interest, purely from interest earning interest on itself each quarter.
Example 2: ₹50,000 invested at 8% annual interest for 3 years, compounded monthly (k=12). Simple interest = 50,000 × 8 × 3 / 100 = ₹12,000, maturity = ₹62,000.00. Compound interest = 50,000 × (1 + 0.08/12)³² − 50,000 ≈ ₹13,511.85, maturity ≈ ₹63,511.85 — a gap of over ₹1,500, showing how both a longer time period and more frequent compounding widen the difference.
Why compounding frequency matters
The same annual rate produces a different result depending on how often it compounds — more frequent compounding (monthly beats quarterly beats annually) always produces a slightly higher return for the same nominal rate, since interest starts earning its own interest sooner. This is the same reason business loan EMIs and fixed deposits quote both a "rate" and a "compounding frequency" — the two together, not the rate alone, determine the actual return or cost.
Reading the year-wise table
The table below the results shows both amounts at the end of every year, so you can see the gap between simple and compound interest widen visually over time — the two start identical (interest hasn't had a chance to compound yet) and diverge more with each additional year.
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Frequently Asked Questions
Maturity amount = P × (1 + r/(100k))^(kt), where P is principal, r is annual rate %, k is compounding periods per year, and t is time in years. For ₹10,000 at 10% for 2 years quarterly, the amount is ₹12,184.03.
Interest = P × r × t / 100, where P is principal, r is annual rate %, and t is time in years. For ₹10,000 at 10% for 2 years, simple interest is ₹2,000, for a maturity amount of ₹12,000.
Compound interest is calculated on the principal plus previously earned interest, so each period earns slightly more than the last. Simple interest only ever earns on the original principal, so it grows linearly instead of exponentially.
It makes a real but usually modest difference for typical rates and short time periods — more frequent compounding always produces a slightly higher return, and the gap grows with higher rates and longer time periods.
Each row shows the maturity amount at the end of that year under both simple and compound interest, so you can see visually how the gap between the two widens the longer money is invested.
