Simple Interest Calculator

The charge you will be paying for borrowing money is called simple interest. When a borrower takes money from a lender, an extra amount of money is paid back to the lender. This surplus money is called interest.

The simple interest is computed by multiplying the principal amount by the period and the interest rate. If the funds on your investment are accrued depending on simple interest, then you can use a simple interest calculator to know how much interest will be accrued by your deposit beforehand. Use the simple interest calculator on the CreditMantri website and know the result instantly.

How to Compute the Simple Interest?

To compute the total maturity value

Fixed deposit interest rates are typically calculated using two methods: simple interest and compound interest.

The total maturity value at the end of the investment tenure is given by

A = P (1 + r t)

Here,

A is the total accumulated amount

P is the principal

r represents the annual rate of interest in decimals

T represents the tenure in months or years

To compute the interest on the investments and loans,

SI = P X R X T/100

SI is the simple interest

P is the principal

T is the time

R is the rate of interest

Suppose Mr. A has invested an amount of Rs. 30,000 at an interest rate of 5% for 3 years. Then,

SI = P X R X T/100

= 30,000 X 5 X 3 /100

= 4500

The maturity amount is P + SI = 30,000 + 4500

= 34,500

For computing the maturity amount directly

A = 30,000 (1 + 0.05X3)

= 30,000 (1 + 0.15)

= 30,000 (1.15)

= 34,500

When is the Simple Interest Formula Used?

The simple interest formula is an easy one to compute the interest at which the money is borrowed. It is used

• When you have borrowed money:The simple interest formula will help in computing the borrowing cost. This is the amount repaid as interest along with the principal amount at the end of the tenure.
• When money is lent:When you have lent money to someone, to know the extra income that you will receive as interest, you must use the simple interest formula. It helps you compute this surplus income easily.
• When you have invested money:If someone has invested their surplus money in deposits such as FD, RD, or savings schemes like SSY, PPF, or others, the interest income can be computed using the simple interest formula.

Benefits of a Simple Interest Calculator

The advantages of using a simple interest calculator are as follows:

• SI is calculated regardless of the unit. Be it the rupee, pound, or any other currency, the calculation is done efficiently and instantly.
• Manual calculations take a lot of time whereas using an online tool such as a simple interest calculator helps in saving time.
• Knowing about the total return and maturity time helps you make proper decisions regarding your investment.
• The calculator helps you in determining the current value of money.

FAQs on Simple Interest Calculator