Simple interest calculator

Interest equals principal multiplied by the yearly rate in percent and by the number of years, divided by 100. The amount at the end is the principal plus that interest. Principal is the original sum deposited or borrowed. This page takes the period in years; a period in months is divided by 12, and one in days by 365, before it goes into the formula.

A principal of ₹1,00,000 at 7% a year for 5 years earns ₹1,00,000 × 7 × 5 ÷ 100 = ₹35,000 of interest. The amount at the end is ₹1,35,000. Every year adds the same ₹7,000, which is why the growth chart shows a straight rise of equal steps, split into principal and interest earned.

It takes a principal from ₹1,000 to ₹10,00,00,000, a rate from 1% to 20% a year, and a period from 1 to 30 years. It then shows three what-if cases beside the main result: 5 more years, 1% more interest, and twice the principal, each with the difference in rupees. Because the formula multiplies the three inputs, doubling any one of them doubles the interest.

Under compound interest, each period's interest is added to the sum, so the next period's interest is worked out on a larger base. Simple interest keeps the base fixed. For the same rate over a year or more, simple interest is never higher than compound interest, and the gap widens as the years pass. The site has a separate compound interest calculator for that case.

Simple interest is the working used for a bond's fixed coupon, for a loan charged at a flat rate on the amount borrowed, and for a deposit whose interest is paid out instead of left to grow, as in the Post Office Monthly Income Scheme and the Senior Citizens' Savings Scheme. Most bank fixed deposits that let interest accumulate compound it, usually every quarter, so this calculator does not match their maturity amounts. It also leaves out tax on the interest, fees and inflation.