Home
Back
Simple Interest Formula:
| From: | To: |
Simple interest is a method of calculating interest on a principal amount where the interest is calculated only on the original principal throughout the loan or investment period. It is commonly used for short-term loans and fixed deposits.
The calculator uses the simple interest formula:
Where:
Explanation: The formula calculates the interest earned based on the principal amount, interest rate, and time period. The result is then added to the principal to get the total amount.
Details: Accurate interest calculation is crucial for financial planning, investment decisions, loan repayment strategies, and understanding the growth of savings in fixed deposits and other investment instruments.
Tips: Enter principal amount in INR, annual interest rate in percentage, and time period in years. All values must be positive numbers. The calculator will display both the interest earned and the total amount.
Q1: What is the difference between simple interest and compound interest?
A: Simple interest is calculated only on the principal amount, while compound interest is calculated on the principal plus accumulated interest from previous periods.
Q2: Is simple interest used for SBI fixed deposits?
A: Most bank fixed deposits use compound interest, but this calculator provides simple interest calculations for educational and comparison purposes.
Q3: Can I calculate interest for months instead of years?
A: Yes, simply convert months to years by dividing by 12 (e.g., 6 months = 0.5 years).
Q4: What is the typical interest rate for SBI fixed deposits?
A: SBI FD rates vary based on tenure and amount, typically ranging from 2.9% to 5.4% for general public (rates subject to change).
Q5: Are there any taxes on fixed deposit interest?
A: Yes, interest earned on fixed deposits is taxable under Income Tax Act, and TDS may be deducted if interest exceeds ₹40,000 (₹50,000 for senior citizens) in a financial year.