Simple Interest Calculator
$0.00 total interest earned
| Year | Interest This Year | Cumulative Interest | Balance |
|---|
How Simple Interest Is Calculated
Simple interest grows in a straight line rather than compounding: interest is calculated only on the original principal for the entire time period, using I = P × r × t (principal times annual rate times time in years). Unlike compound interest, previously earned interest never itself earns interest, so the amount added each period stays constant. This makes simple interest common for things like short-term personal loans, certain auto loans, and some bonds, while savings accounts and most investments typically compound instead.
A Note on Months and Days
If you enter a time period in months, this calculator converts it to years by dividing by 12; for days, it divides by 365 (the standard ordinary-year assumption used by most simple-interest calculators, rather than a 360-day banker's convention). If your loan or account explicitly uses a 360-day count, expect a small difference from real-world statements.
When Compounding Would Change the Picture
If the interest on your account or loan is actually added back to the balance periodically, you're not dealing with simple interest at all — use the compound interest calculator instead to see how reinvested interest accelerates growth. And if you're trying to figure out the rate needed to hit a savings goal or the interest cost on a loan more generally, the interest calculator covers both simple and compound scenarios side by side.
Frequently Asked Questions
How is simple interest different from compound interest?
Simple interest is calculated only on the original principal for the whole time period, so the dollar amount of interest earned or owed each year stays the same. Compound interest, by contrast, adds earned interest back to the balance so future interest is calculated on a growing amount, which produces faster (exponential) growth over time.
How does this calculator handle time periods in months or days?
If you choose months, the calculator divides the number of months by 12 to get years; if you choose days, it divides by 365 (an ordinary calendar year), since that is the standard assumption most simple-interest calculators use. Some lenders use a 360-day banker's year instead, which can produce a slightly different result on official statements.