What is the difference between simple and compound interest?

Simple interest is calculated only on the principal. Compound interest is calculated on principal plus accumulated interest.

Which banks use simple interest?

Simple interest is common for short-term loans and some fixed deposits. Most savings accounts use compound interest.

Simple Interest Formula

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Simple Interest is the basic form of interest calculation where interest is charged only on the principal amount, not on accumulated interest.

Simple Interest Formula

SI = P × R × T / 100

SI = P × R × T / 100

P=Principal, R=Rate per annum, T=Time in years

A = P + SI

Principal plus interest earned.

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