Simple interest formula
SI = P × R × T ÷ 100
P is the amount, R is the yearly rate in percent and T is the time in years.
For ₹1 lakh at 8% for 10 years, SI = ₹1,00,000 × 8 × 10 ÷ 100 = ₹80,000. That's ₹8,000 a year, ₹667 a month or about ₹22 a day.
Compound interest formula
A = P × (1 + r ÷ n)n × t
r is the yearly rate as a decimal, n is how many times a year interest is added (12 for monthly, 365 for daily) and t is the time in years. Compound interest is A − P.
The same ₹1 lakh at 8% compounded monthly for 10 years grows to ₹2,21,964, so the interest is ₹1,21,964, about ₹41,964 more than simple interest. The gap widens every year, because each year's interest also earns interest.
Where each one is used
Simple interest is common for short personal loans, some gold and vehicle loans, and calculating interest on late payments. Compound interest applies to fixed deposits, savings accounts, PPF, credit card dues and most investments. If you're unsure which applies, check the terms your bank or lender gives you.
Questions people ask
What is the difference between simple and compound interest?
Simple interest is paid only on the original amount. Compound interest is also paid on interest already added, so the amount grows faster the longer you leave it.
How do I work out interest per day?
Multiply the amount by the yearly rate and divide by 365. For ₹1 lakh at 8%, that is ₹1,00,000 × 0.08 ÷ 365, about ₹22 a day.
Which compounding should I choose?
Use whatever your bank, lender or scheme states. Savings accounts usually credit interest quarterly, FDs compound quarterly, and many loans charge interest monthly.
Can I use this for a loan?
Yes, for the interest on a lump sum. For a loan you repay in monthly instalments, use the EMI calculator, which reduces the balance with each payment.
Are my numbers saved anywhere?
No. Everything is calculated in your browser. A share link carries the numbers in the link itself, not on our servers.
Method and sources
Time is taken as years + months ÷ 12 + days ÷ 365. Compound interest uses A = P(1 + r/n)nt, including any part period. Interest per day, month and year is simple interest on the starting amount. Results are before tax. How we calculate.
Last reviewed 22 Oct 2026 by the WealthFeedz team.