Simple & Compound Interest Calculator
Calculate SI, CI & Compare Both
Calculate simple interest or compound interest instantly, with full step-by-step working and a side-by-side comparison — built for TN Board, CBSE, Accountancy, Economics and TNPSC students.
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How to Calculate Simple & Compound Interest
Simple Interest (SI) is calculated only on the original principal amount, every year, using a fixed formula — it never changes even as time passes.
SI = (P × R × T) / 100
Compound Interest (CI), on the other hand, is calculated on the principal plus all interest earned so far — meaning each period's interest is added to the base before the next period's interest is calculated. This is why CI grows faster than SI over time, especially with more frequent compounding (monthly compounds faster than yearly).
A = P × (1 + R/(100×n))n×T
Here, P is the principal, R is the annual interest rate, T is the time in years, and n is how many times per year the interest compounds (1 for yearly, 4 for quarterly, 12 for monthly). The Compound Interest earned is simply CI = A − P.
For short time periods or low rates, SI and CI give very similar results — but the gap widens significantly over longer periods, which is why CI is used for most real-world loans, fixed deposits, and investments, while SI is more common in basic Accountancy and school-level numerical problems.
← Back to Accounting homework helpInterest Calculator — Questions Answered
Simple Interest is calculated only on the original principal every period, so it grows by the same fixed amount each year. Compound Interest is calculated on the principal plus all previously earned interest, so it grows by an increasing amount each period — this is often called "interest on interest."
The more frequently interest compounds, the sooner each bit of interest starts earning its own interest. Monthly compounding (n=12) produces a slightly higher final amount than yearly compounding (n=1) at the same annual rate, because interest is added to the principal 12 times a year instead of once.
Most real-world products — savings accounts, fixed deposits, home loans, credit cards — use compound interest, since it more accurately reflects how money grows or accrues over time. Simple interest is mainly used in short-term loans, some bonds, and as a simpler introductory concept in school Accountancy and Maths syllabi.
For short periods (1-2 years) at moderate rates, the difference is usually small. But over longer periods, compound interest grows much faster because it compounds on itself — use the "Compare SI vs CI" mode above to see the exact rupee difference for your own numbers.
Yes — simple and compound interest are core topics in Class 10-12 Accountancy, Business Mathematics, Economics, and appear regularly in TNPSC quantitative aptitude sections. Check the step-by-step section after calculating to see the exact formula and substitution method expected in exam answers.