# Interest Calculator

Want to know how much you can earn/pay interest  (ब्याज/ byaj ) on specific amount. Bank calculate interest on Quarterly basis, Interest can be counted in various method, it's not as easy as seen. Before taking any loan or making deposits in account you must check there interest formula, vyaj/ interest formula can make mush difference in what you get or what you pay in long term. Here is a online interest calculator with various methods like given below:

## A. Simple Interest / Sadharan byaj calculator ( सरल ब्याज )

Simple interest is a straightforward method of calculating interest on a loan or investment. It's based only on the initial principal amount of money, without taking into account any additional contributions or withdrawals made during the interest period. In this method of interest calculation you would get least amount in return.

Simple Interest Formula = Principal × Rate × Time

• Principal is the initial amount of money lent or invested.
• Rate is the interest rate per period (usually expressed as a percentage).
• Time is the time period for which the money is borrowed or invested (usually expressed in years).

For Example - If you have invested Rs. 1000 for 2 year for 8% rate with simple interest. Then after two year you will get 1000 Principal + 160 (Interest) = 1160

## B. Compound Interest Calculator / Chakravarti byaj calculator

Compound interest can be of 4 types based upon the compounding period.

### 1. Compound Annual Interest  ( वार्षिक चक्रवृद्धि ब्याज )

Annual compounding interest refers to the process where interest is calculated and added to the principal amount once per year. This means that each year, the interest is calculated based on the initial principal amount plus any interest that has already been added to the principal. In simple words "In Annual Compounding interest, the interest amount is added in principal amount (annually) for further calculation of interest".

Compound Annual Interest Formula =  Principal × 1+ r)n

• is the number of years the money is invested for.

For Example - If you have invested Rs. 1000 for 2 year for 8% rate with annual compounding interest, then after two year you will get 1000 (Principal) + 166.40 (Interest) = 1166.40

Note - In this compound annual interest in first year you will get interest of 80 Rs. same as simple interest but in second year the interest will be calculated on 1080 (Principal + interest of 1 year) amount. So the final amount after two year would be more than simple interest. That the power of compounding interest. In long time it makes huge difference.

The real life classic example of Annual compounding interest is Public Provided Fund (PPF) account.

### 2. Compound Semi Annual Interest ( अर्द्धवार्षिक चक्रवृद्धि ब्याज )

Semi-annual compounding interest refers to the process where interest is calculated and added to the principal amount twice per year, typically every six months. This means that the interest is applied to the principal amount at regular intervals, and each time, the interest is calculated based on the new principal amount.

Compound Semi Annual Interest Formula =  Principal × (1+ r / n)nt

• For Semi Annual compounding, "𝑛" would be 2.

For Example - If you have invested Rs. 1000 for 2 year for 8% rate with semi annual compounding interest, then after two year you will get 1000 (Principal) + 169.86 (Interest) = 1169.86

### 3. Compound Quarterly Interest ( त्रेमासिक चक्रवृद्धि ब्याज )

Quarterly compounding interest refers to the process where interest is calculated and added to the principal amount four times per year, typically every three months. This means that the interest is applied to the principal amount at regular intervals, and each time, the interest is calculated based on the new principal amount.

Compound Quarterly Interest Formula =  Principal × (1+ r / n)nt

• For quarterly compounding, "𝑛" would be 4.

For Example - If you have invested Rs. 1000 for 2 year for 8% rate with quarterly compounding interest, then after two year you will get 1000 (Principal) + 171.66 (Interest) = 1171.66

The real life classic example of quarterly compounding interest is Fixed Deposit account.

### 4. Compound Monthly Interest ( मासिक चक्रवृद्धि ब्याज )

Monthly compounding interest refers to the process where interest is calculated and added to the principal amount twelve times per year, typically every month. This means that the interest is applied to the principal amount at regular intervals, and each time, the interest is calculated based on the new principal amount.

Compound Monthly Interest Formula =  Principal × (1+ r / n)nt

• For monthly compounding, "𝑛" would be 12.

For Example - If you have invested Rs. 1000 for 2 year for 8% rate with monthly compounding interest. Then after two year you will get 1000 (Principal) + 172.89 (Interest) = 1172.89

The real life  example of monthly compounding interest is IDFC First Bank Saving account.

Let's compare the return of various interest calculation methodologies on investment of Rs. 10,00,000 for a period of 25 years.

Principal Amount = 10,00,000 (Ten Lac) and Interest Rate is 8 %.

 Simple Interest Annual Compounding Interest Semi Annual Compounding Interest Quarterly Compounding Interest Monthly Compounding Interest 1 Year 80,000 80,000 81,600 82,432 83,000 2 Years 1,60,000 1,66,400 1,69,859 1,71,659 1,72,888 5 Years 4,00,000 4,69,328 4,80,244 4,85,947 4,89,846 10 Years 8,00,000 11,58,925 11,91,123 12,08,040 12,19,640 15 Years 12,00,000 21,72,169 22,43,398 22,81,031 23,06,921 20 Years 16,00,000 36,60,957 38,01,020 38,75,439 39,26,803 25 Years 20,00,000 58,48,475 61,06,683 62,44,646 63,40,176