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Simple Interest Calculator

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What is the meaning of interest rate or the rate of interest?

The interest rate or as it is also known as the rate of interest is the amount that is charged & it is denoted as the principal’s percentage. This is the amount that is given to the borrower by a lender. In other words, the rate of interest happens to be an amount of the interest that is the proportion of the amount being either lent or borrowed or deposited. This amount is also known as the principal sum. Moreover, this (interest) is the amount which is charged by the financial entity or the lender when they lend money to another party.

What is simple interest?

The interest which is calculated on the principal amount is known as the simple interest. Moreover, this simple interest can also be calculated on the principal amount which is left. Even this simple interest is applied over a period of time.

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What is compound interest?

On the other hand, compound interest means that it is inclusive of the interest which has been earned on interest collected until that time.

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Fixed deposit

\(\frac{a}{b}\)

Fixed deposit is also popularly known as FD & it is nothing but a financial instrument that is provided by the banks. And this is given to the investors that too with the increased rate of interest when compared to the usual savings account. This continues until the maturity date comes up. At times or in some financial institutions, an individual will not require any other account to open up a fixed deposit account. While the interest earned on this fixed deposit is known as the fixed deposit interest.

Recurring deposit

Especially in India, one can see a rise in the RD which in turn is the short form for recurring deposit. This RD or the recurring deposit is nothing but a Term Deposit which the banks in India usually offer. With the help of this recurring deposit, people will be able to save a part of their income in the form of a fixed amount almost every month. The best part of an RD or the recurring deposit is that, one will be able to earn interest on the amount & the rate of interest would be on par with that of the fixed deposit.

How to calculate the interest calculator?

It is very easy for an individual to calculate the interest & for this you can follow the steps which have been listed below. First things first, all the fields have to filled with the correct value apart from all the fields being filled.

In the 1st field, you should mention the principal or the amount & this is to be followed by the rate of interest. The next field is the duration so, you can mention as to how many days or months or years are required to clear the amount. Finally, click on the tab which reads ‘calculate’. In this manner, you will get the interest calculated for the said amount.

Interest calculator formulae

  1. Formula to calculate simple interest

\( I=P\quad r\quad t\)

In the above equation, I is the interest while P is the principal or the initial sum which is borrowed. While r means the interest rate (that has been written in the form of a decimal) & t is the number of time (periods) that too from the time the loan began. The above formula can also be written in the following manner –

\(P\quad =\quad \frac{ I}{RT} \quad or\quad R\quad =\quad \frac{I}{PT} \quad or\quad T\quad =\quad \frac {I}{PR}\)

  1. Compound interest calculator formula

If you wish to calculate the compound interest then the formula mentioned below is applicable –

\(P’\quad = \quad P\quad(\quad 1\quad + \quad \frac{r}{n}\quad )^{nt}\)

In the above equation, P = original principal amount; P means the new principal sum; nominal annual interest rate = r; n = compounding frequency & t is the overall length of time that is from the time interest has been applicable (charged).