Compound Interest vs Simple Interest: Which Grows Faster?
By Dheeraj Yadav • August 16, 2026 • 1 min read
Simple Interest
Simple Interest = Principal × Rate × Time / 100. It is calculated only on the original principal — interest earned does not itself earn further interest.
Compound Interest
Compound Interest = Principal × (1 + Rate/n)^(n×Time) - Principal. Here n is the compounding frequency (annually, quarterly, monthly, daily). The key difference: compound interest earns interest on previous interest — exponentially growing your wealth over time.
Example: ₹1 Lakh for 10 Years at 10%
- Simple Interest: ₹1,00,000 → ₹2,00,000 (₹1 lakh gain)
- Compound (Annual): ₹1,00,000 → ₹2,59,374 (₹1.59 lakh gain)
- Compound (Monthly): ₹1,00,000 → ₹2,70,704 (₹1.70 lakh gain)
Use our Compound Interest Calculator to run your own scenarios.
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