Simple Interest Calculator

Principal Amount


No.of Years

1 yrs
25 yrs

Interest Rate

1 %

Simple Interest Calculator

Investkraft’s basic simple interest calculator is the only handy tool you will require if you want to calculate interest on savings accounts or loans without including the value of compounding. The calculator can calculate the simple interest you will earn on your deposited principal amount.

Whether you want to borrow money or invest your savings, it's important to understand how much interest you'll have to pay or how much you'll earn in return. This information is crucial for managing your finances and making informed decisions. Fortunately, we have a simple interest calculator that makes it easy for anyone to calculate the interest they'll owe or receive over a certain time. Give it a try and take control of your financial future!

How Does Simple Interest Work?

Simple interest (SI) is a way of calculating the cost of borrowing money or depositing money in a bank account. It is based on a percentage of the amount you borrow or deposit and the amount of time you keep it. SI is usually calculated per year. This cost doesn't include any extra charges or interest added later.

Non-Banking Finance Companies (NBFCs) often use the SI method to offer short-term loans like consumer loans and personal loans. Some of these loans have a term of 3 months. It's a good idea for borrowers to pay off these loans earlier than their due date, as this can help lower the total amount they owe.

Now, let’s dive into the formula of simple interest and how it works in determining the interest an investor/borrower receives/owes with the help of an example.

Simple Interest Calculator Formula

A = P (1+rt)


P = Principal Amount

R = Rate of interest

t = Number of years

A = Total accrued amount (Both principal and interest)

Interest = A – P.

Let's say Shalu invests ₹10,000 (P) in a savings account with an annual interest rate (R) of 5%. She decides to leave the money in the account for 3 years (t).

Using the formula A = P(1 + rt), we can calculate the total accrued amount (A):

A = 10,000(1 + 0.05*3)

= 10,000(1 + 0.15)

= 10,000(1.15)

= ₹11,500

So, after 3 years, Shalu's investment will have grown to ₹11,500.

Now, to calculate the interest earned, we subtract the principal amount (P) from the total accrued amount (A):

Interest = A - P

= ₹11,500 - ₹10,000

= ₹1,500

Therefore, Shalu will have earned ₹1,500 in interest over the 3 years.

How to Use the Simple Interest Calculator?

Using the simple interest calculator from Investkraft is the most efficient way to calculate interest amounts on any deposited principal amount. Here is how you can use the calculator in a step-by-step manner:

  • Enter a principal amount of your liking in the calculator
  • Select the number of years you wish to stay invested for
  • Select a reasonable interest rate
  • Click on the tab that reads “Invest Now”

What are the Benefits of Simple Interest?

Given below are some real-life benefits of lending or borrowing money on simple interest:

  • Can be Calculated Easily: To calculate simple interest on a loan, you multiply the borrowed amount by the interest rate and duration of the loan. The interest is always based on the principal amount.
  • Less Interest on Loans: : Consider a simple interest loan when taking out a loan. This type of loan saves money in the long run. With each payment, a part goes towards interest and the remaining amount towards the actual loan. As your monthly payments decrease the loan amount, the interest you pay also decreases. This means more of your monthly payment goes towards paying off the loan amount.
  • No Additional Interest to be Paid:When you borrow money, you need to pay back more than you borrowed, which is called interest. There are two types of interest calculations: simple and compound. Simple interest is calculated based only on the borrowed amount, while compound interest is calculated on the borrowed amount and the interest owed. Compound interest leads to paying interest on top of interest, which can result in a lot of extra money in the long run. If you want to save on interest payments, choose a lender that offers simple interest loans.
  • Great Option for Borrowers: There are two types of interest: simple and compound. Simple-interest loans have lower rates than compound-interest loans. If you pay off a simple interest loan early or make extra payments, you can reduce the interest you'll have to pay.
  • Pay Early to Save Interest: Paying more than what is due each month on a simple interest loan can lower interest paid over time. You can also pay off the loan early without additional fees or penalties.

FAQs on Simple Interest

A: For fixed deposits with a tenure of 6 months or less, the interests are calculated at simple interest while for long-term fixed deposits, the interests are calculated at compound interest.

A:Instead of doing the simple interest calculation yourself, use Investikraft’s reliable simple interest calculator to calculate the interest of your principal amount.

A:If you want to calculate interest on a loan or investment, you might need to convert the time from months to years. To do this, you simply divide the number of months by 12, since there are 12 months in a year. This helps you express the period in years, which is a common way of calculating interest.

A:Sum, also called the sum of money, in simple interest is the final value you will receive after adding the principal and interest amounts.

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