Deposits & govt schemes

Simple Interest Calculator

Calculate simple interest for any amount and period, and see how much more the same money would earn with compounding.

Reviewed 27 September 2026By Viraj SarfareFormula shown belowRuns in your browser

Principal

₹

Interest rate (per year)

%

0.5%36%

Years

yrs

0 yrs30 yrs

Additional months

months

0 months11 months

Simple interest for 3 years 6 months

₹31,500

Total amount ₹1,31,500

Total amount₹1,31,500

Interest per year₹9,000

Compound interest (yearly) instead₹35,205

Extra with compounding₹3,705

The simple interest formula

Simple interest is calculated only on the original amount, the principal. The interest does not itself earn interest, so the total grows in a straight line. It is the method behind many personal loans between friends and family, some gold loans, the interest on a post office MIS or SCSS payout, and school maths problems.

FORMULA

SI = P × R × T ÷ 100
Total amount = P + SI

P = principal · R = annual rate in % · T = time in years (6 months = 0.5)

Worked example

On ₹1,00,000 at 9% a year for 3 years 6 months (T = 3.5 years), simple interest is ₹31,500, so the total amount is ₹1,31,500. That is ₹9,000 of interest every year. With yearly compounding instead, the interest would be ₹35,205.

Simple vs compound interest

	Simple interest	Compound interest
Interest calculated on	Principal only	Principal plus past interest
Growth pattern	Straight line	Curve that steepens over time
Common uses	Short loans, payout schemes, car loans in some cases	FDs, PPF, SIPs, credit cards

Over one year the two are almost the same. Over many years, compounding wins by a wide margin, which the chart makes visible.

Watch out for "flat rate" loans

Some lenders quote a "flat" interest rate on car loans, consumer durables or microfinance. Interest is calculated like simple interest on the full original loan for the whole tenure, even though you repay part of it every month. The true cost is almost double the quoted flat rate. Check it on the flat vs reducing rate calculator.

Lending money to family or friends

If you lend or borrow informally, agreeing on simple interest keeps things transparent: the interest is the same every year and easy to check. Write down the amount, rate, start date and repayment plan, and both sign it. For larger sums, a simple loan agreement on stamp paper protects both sides and avoids misunderstandings later.

Frequently asked questions

How do I calculate simple interest for months?

Convert months to years by dividing by 12. For 18 months, T = 1.5. The calculator does this for you.

Is bank FD interest simple or compound?

Cumulative FDs use quarterly compounding. Payout FDs pay out interest, so there's no compounding on it.

What is the formula for principal from simple interest?

P = SI × 100 ÷ (R × T). Similarly R = SI × 100 ÷ (P × T) and T = SI × 100 ÷ (P × R).

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Written and checked by Viraj SarfareFormula and rates last reviewed on 27 September 2026. Found an error? Tell us and we'll fix it.