# Interest Rate Calculator: Things You Must Know!

## What is an Interest Rate Calculator?

An interest rate calculator is a digital calculator that calculates the interest rate for you instantly. You just need to enter the details like principal amount, interest rate, and repayment tenure. This online tool, an interest rate calculator, will do the math for you and show you the exact result. Having an interest rate calculator lets you save a lot of time and have a quick insight into the interest you will be liable for over a period of time.

## Types of Interest Rate Calculator

There are two types of interest charged on any sort of investment or loan, compound interest and simple interest. You can have access to a compound interest calculator as well as a simple interest calculator for ease of calculation. Let's know more about them in detail.

As said, there are broadly two types of interest charged and accordingly, you can use the type of calculator suitable.

## What is the difference between simple interest and compound interest?

In very simple words, simple interest is the interest charged/earned on the principal amount. On the other hand, compound interest is the interest charged on the principal amount including the previous interest earned. Check out the table below for further details –

 Simple Interest Compound Interest It is the interest charged on the principal amount only It is the interest charged on the principal amount and the interest accumulated so far The formula is- (PxTxR)/100 The formula is- P(1+R⁄100)t − P The return earned is average The return earned is comparatively much higher The principal amount remains the same throughout the tenure The principal amount keeps changing because the interest gets added in it

Simple Interest Calculator What is Simple Interest Calculator
A simple interest calculator takes into consideration your entered tenure of investment/debt, the interest rate charged, and the principal amount of loan/investment. Based on these inputs, the digital calculator finds out the total interest you will pay/earn. What is the simple interest formula
Simple interest has a very simple formula –
Simple interest= (PxRxT) /100
Here, P stands for the Principal Amount, R stands for Rate of Interest and T stands for the Time period Example explaining simple interest calculation
Let's assume that Mr Brajesh is planning for an investment of ₹1,00,000 for 5 years. For this investment, he will receive 13% of interest per year. So, the overall simple interest earned throughout the tenure will be
 Simple Interest Mr Brajesh invests ₹1 lakh for a tenure of 5 years at a simple interest rate of 13% Formula - (PxRxT)/100 Interest earned in 5 years will be (1,00,000x13x5)/100 = ₹65,000 How does a simple interest calculator work?
A simple interest calculator is designed in a way that it takes your input and the formula of simple interest and automatically calculates the interest. How to use an online simple interest rate calculator?
• Visit any preferred website and click on the simple interest rate calculator.
• Now enter the details as asked like tenure, interest rate, and the principal amount.
• After you submit, the calculator will show the result. Benefits of simple interest calculator
You get to enjoy several benefits once you use the simple interest calculator –
• It has all the setup done beforehand, you just need to enter the details.
• The result, as per your inputs, are accurate.
• You need not do any calculations.
• Calculate the interest without having to go anywhere. Do it from your comfort zone.
• Get instant results within a few clicks.
Compound Interest Calculator
Here are the details about the ABSLI compound interest calculator – What is a Compound Interest Calculator?
A compound interest calculator is a digital calculator where you provide the inputs of your investment or loan and the tool calculates the interest on it based on the compound interest formula. What is the Compound Interest formula?
The formula for the compound interest is –

Compound Interest= P(1+R/100)t - P

Here, P stands for the Principal Amount
R stands for Rate of Interest and
T stands for the Time period Example explaining compound interest calculation
Let's assume that Mr Suresh is planning for an investment of ₹1,00,000 for 5 years. For this investment, he will receive 13% of interest per year. So, the overall compound interest earned throughout the tenure will be
 Compound Interest Mr Suresh invests ₹1 lakh for a tenure of 5 years at a compound interest rate of 13% Formula- P(1+R/100)t - P Interest earned will be 1,00,000 (1+13/100) =₹ 1,84,243.52 How does a Compound Interest Calculator work?
When you enter the details, like tenure, principal amount, and the compound interest rate, it automatically calculates the interest for you. How to use the Compound Interest Rate Calculator?
• Visit the website and click on the compound interest calculator
• Enter the inputs.
• Submit and the result will be instantly shown on your screen. Benefits of Compound Interest Calculator
Several benefits of using a digital tool like compound interest calculator is –
• Enjoy the instant calculation within a few clicks.
• You just need an internet connection and enjoy calculation from your comfort zone.
• You will no longer have to do the math.
• ASBLI offers 100% free calculators.
• The result is accurate, as per your inputs provided.

## Frequently Asked Questions on Interest Rate Calculator

#### What is a simple interest calculator?

It is a digital calculator that calculates the simple interest rate based on the input you provide. It requires you to enter tenure, principal amount, and the interest rate of your investment/loan.

#### What is a compound interest calculator?

A compound interest calculator is an online calculator where you enter details like tenure, principal amount, and interest rate of the loan/investment made by you.

#### What is daily, monthly, and yearly compounding calculation?

Daily compounding is the one where the bank calculates the interest on a daily basis. However, for a monthly or yearly calculation, the interest is calculated once a month or once a year. The lower the frequency of the compound calculation, the higher will be the interest earned.

#### How to calculate the interest rate per month?

You can calculate the annual interest rate and then divide it by 12. For instance, suppose if your investment tenure is 5 years and the total interest accumulated is 1 lakh, then monthly interest will be:
1,00,000/(5x12)
=1,00,000/60
=₹ 1,666.66
So, the interest earned per month will be ₹1,666,66.
Show All
Hide