Free interest calculator to calculate simple interest, compound interest, and total amounts for loans and investments.
Calculate loan interest costs, investment returns, and savings growth with accurate interest calculations.
Plan your finances with detailed interest analysis for various time periods and interest rates.
Enter the principal amount (initial investment or loan amount)
Select the interest rate (annual percentage)
Choose the time period (in years or months)
Select interest type: simple or compound interest
For compound interest, choose compounding frequency (monthly, quarterly, yearly)
Optional: Add regular contributions for investment calculations
Click 'Calculate' to see total amount, interest earned, and payment breakdown
Review detailed year-by-year interest accumulation
₹5,00,000 personal loan at 14% simple interest for 3 years
₹2,00,000 FD at 7.5% compound interest for 5 years (quarterly compounding)
₹1,00,000 credit card balance at 36% annual interest (monthly compounding)
Initial ₹50,000 + ₹5,000 monthly at 8% compound interest for 10 years
₹8,00,000 car loan: 5-year at 9% vs 7-year at 9.5% interest
Calculate total interest costs for personal loans, car loans, and education loans to compare different loan offers and choose the most affordable option.
Plan your investment growth by calculating compound interest returns on savings, fixed deposits, and other investment instruments over different time periods.
Understand the true cost of credit card debt and other high-interest loans to prioritize debt repayment and avoid unnecessary interest expenses.
Project the growth of your retirement savings with compound interest and regular contributions to ensure you're on track for your retirement goals.
Calculate how much to save regularly for your children's education by understanding compound interest growth over different time horizons.
Interest is the cost of borrowing money or the return on investing money. Simple interest is calculated only on the original principal amount, making it straightforward but less powerful for long-term growth. Simple interest is commonly used for short-term loans, personal loans, and some types of bonds where the interest doesn't compound.
Compound interest is more powerful because it includes interest earned on previously accumulated interest. This creates exponential growth over time, where your money starts earning money on itself. The frequency of compounding significantly affects the total amount earned - more frequent compounding (daily or monthly) generates higher returns than less frequent (quarterly or annual) compounding.
Understanding interest calculations is crucial for both borrowers and investors. For borrowers, it helps understand the true cost of loans and prioritize debt repayment. For investors, it demonstrates the power of starting early and staying invested for longer periods. The Rule of 72 is a useful shortcut to estimate how long it takes money to double: divide 72 by the interest rate.
Not understanding the impact of compounding frequency
For the same nominal rate, more frequent compounding generates higher returns. Always compare effective annual rates rather than nominal rates when evaluating investment options.
Ignoring tax implications on investment returns
Consider after-tax returns when comparing investment options. Different instruments have different tax treatments - some offer tax benefits while others are fully taxable.
Not accounting for inflation in long-term planning
Use real return rates (nominal return minus inflation) for long-term financial planning to maintain purchasing power over time.
Only comparing interest rates without considering terms
Consider loan terms, fees, prepayment penalties, and flexibility in addition to interest rates when comparing loan options.
Not starting early enough to benefit from compounding
Start investing as early as possible, even with small amounts. Time in the market is more important than timing the market for compound growth.
Underestimating the impact of high-interest debt
High-interest debt like credit cards can quickly grow due to compound interest. Prioritize paying off high-interest debt before making significant investments.
Simple interest is calculated only on the principal amount, while compound interest includes interest on previously accumulated interest. Compound interest generates exponential growth, while simple interest creates linear growth.
Compounding frequency varies by product: savings accounts typically compound daily, CDs monthly or quarterly, loans monthly, and some investments annually. More frequent compounding generally benefits savers.
The Rule of 72 estimates how long it takes money to double: divide 72 by the annual interest rate. For example, at 8% interest, money doubles in approximately 9 years (72 ÷ 8 = 9).
Inflation reduces real returns. If your investment earns 8% but inflation is 3%, your real return is only 5%. Always consider inflation in long-term financial planning.
Simple interest is better for borrowers as it results in lower total costs. Compound interest on loans can significantly increase the total amount repaid over time.
Credit cards typically use compound interest with daily compounding on the average daily balance. Interest rates are usually expressed as APR but the effective rate can be higher due to compounding.
Interest rates are influenced by central bank policies, inflation expectations, economic conditions, credit risk, time to maturity, and market competition for funds.
Start investing early, choose investments with higher compounding frequency, reinvest all earnings, increase contributions over time, and maintain a long-term investment horizon.