Simple Interest Calculator
Calculate linear interest on principal deposits, consumer loans, and promissory bonds.
Starting principal balance
Nominal rate per annum
Duration of interest calculation
Validation Error
Simple vs Compound Interest
Results
Calculated via standard SI formula: (P × R × T) / 100.
How simple interest is calculated
Simple interest is determined solely by multiplying the daily or annual rate by the original principal:
SI = (P × R × T) / 100
- SI — Simple Interest earned or owed
- P — Principal investment or borrowed loan
- R — Annual nominal percentage rate
- T — Time period in years
- Total Maturity = P + SI
Worked Example
Consider a principal of ₹1,00,000 deposited at an annual rate of 7.5% for 5 years:
SI = (1,00,000 × 7.5 × 5) / 100 = ₹37,500
Total Maturity Value = ₹1,00,000 + ₹37,500 = ₹1,37,500. Over the same period with annual compounding, the investment would grow to ₹1,43,563, giving a compounding advantage of +₹6,063.
Frequently asked questions
Where is simple interest typically used in banking?
What is the formula for simple interest?
Why do savings accounts use compound interest instead?
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Maturity Value
₹1,37,500