An Interest Calculator is a financial tool that helps users determine the interest earned on savings or the interest payable on a loan. By inputting the principal amount, interest rate, and time period, users can quickly estimate their financial growth or obligations.

How an Interest Calculator Works

An interest calculator uses either simple interest or compound interest formulas to compute the total interest over time. Simple interest is calculated as SI = (P × R × T) / 100, where P is the principal amount, R is the annual interest rate, and T is the time in years. For compound interest, the formula A = P(1 + r/n)^(nt) is used to account for interest compounding over time.

Benefits of Using an Interest Calculator

• Quick Financial Estimates – Provides instant calculations for both savings and loan interest payments.
• Investment Planning – Helps users determine how much their savings will grow over time with interest.
• Loan Cost Evaluation – Assists in understanding total interest payable for better financial decision-making.
• Comparing Interest Rates – Enables users to compare different interest rates and compounding options to maximize returns or minimize costs.