Interest Rate Comparison
Compare simple and compound interest on a single investment. See how compounding frequency affects total returns with comparison charts and yearly breakdowns.
About This Calculator
The Interest Calculator lets you compare simple and compound interest side by side for the same principal, rate, and time period. Choose a compounding frequency (annual, semi-annual, quarterly, monthly, or daily) to see how frequently compounded interest outperforms simple interest over time. Results include a bar chart comparison, a breakdown pie chart, and a full yearly comparison table.
Simple interest is calculated using the formula SI = P x r x t, while compound interest uses A = P (1 + r/n)^(nt). The calculator runs both formulas instantly so you can see the difference in total returns. The yearly breakdown table shows how the gap between simple and compound interest widens each year.
Use this calculator to evaluate savings accounts, fixed deposits, bonds, or any investment where you need to compare simple and compound growth scenarios.
Regional Notes
India (IN): Savings accounts typically compound quarterly. Bank FDs use quarterly compounding. PPF compounds annually at government-declared rates. EPF compounds annually at rates set by EPFO.
US: Savings accounts and money market accounts usually compound daily. CDs may compound daily, monthly, or quarterly. 401(k) and IRA investments compound based on the underlying investments' growth schedule.
UK: Cash ISAs and savings accounts often compound annually or monthly. Premium Bonds do not earn interest but are entered into prize draws. Fixed-rate bonds typically compound annually.
Frequently Asked Questions
What is the difference between simple and compound interest?
Simple interest is calculated only on the principal amount, while compound interest is calculated on the principal plus previously earned interest. Compound interest grows faster because you earn interest on interest.
How does compounding frequency affect my returns?
More frequent compounding (daily > monthly > quarterly > annually) results in higher total returns because interest is added to principal more often. For example, ₹1,00,000 at 8% for 5 years yields ₹1,48,985 with monthly compounding vs ₹1,46,933 with annual compounding.
Is simple or compound interest better for savings?
Compound interest is better for long-term savings and investments because your money grows exponentially. Simple interest works well for short-term loans and fixed-income products like bonds where predictable returns are preferred.
How do I use the Interest Calculator?
Enter the principal amount, annual interest rate, time period in years, and choose a compounding frequency. Click Calculate to see how simple and compound interest compare side by side with charts and a yearly breakdown.
How often is interest compounded on savings accounts?
Savings accounts in India typically compound interest quarterly or monthly. US savings accounts usually compound daily and credit monthly. UK accounts often compound annually or monthly. Check with your bank for exact compounding schedules.
What is the formula for compound interest?
The compound interest formula is A = P (1 + r/n)^(nt), where A is the final amount, P is the principal, r is the annual interest rate as a decimal, n is the number of times interest is compounded per year, and t is the time in years.
Can I share my interest calculation results?
Yes, the calculator saves your inputs in the URL so you can copy and share the link. Anyone opening that link will see the same calculation with all values pre-filled.