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FINANCE CALCULATOR

Simple Interest Calculator

Simple interest applies the rate only to original principal. Unlike compound interest, previously earned interest never enters the base.

Calculator

%
years
YOUR RESULTS
Simple interest1,500.00
Principal plus interest
11,500.00
Original principal
10,000.00
Average interest per day
1.37

Simple interest is calculated only on the original principal, without earning interest on prior interest.

Principal and interest

  • Original principal10,000.00
  • Simple interest1,500.00

Understanding your result

Simple interest produces a straight-line result: doubling time doubles interest when principal and rate stay fixed.

If earned interest is reinvested, the Compound Interest Calculator models interest on the growing balance and optional regular contributions.

The formula

I = P × r × t

I is interest, P is the original principal, r is the annual rate as a decimal, and t is time in years. An entered 5% becomes 0.05. Add I to P for the total amount. The daily average divides interest by 365 times the number of years; it is not a dated payment schedule.

Worked example

On 10,000 at 5% a year for three years, interest is 1,500 and the combined amount is 11,500.

How to use this calculator

  1. Enter the original principal and annual percentage rate.
  2. Enter time in years, using 0.5 for six months under this year-fraction convention.
  3. Calculate to compare interest with principal plus interest; read the daily figure as an average, not a contractual daily accrual.

Convert time to the same unit as the rate

The entered rate is annual, so twelve months correspond to one year and three months to 0.25 years. A daily or monthly quoted rate must first be converted to a comparable annual simple rate. Dividing an actual calendar interval by 365 can differ from a contract that uses another day-count convention.

Separate accrued interest from a repayment plan

This calculation holds the original principal constant. It does not reduce the interest base as installments are paid, and it does not add earned interest back to principal. For a repayment loan or a deposit that reinvests interest, use a model that matches those cash flows and compounding terms.

Assumptions & limitations

What this calculation assumes

  • Rate is annual and entered as a percentage.
  • A year is represented as 365 days for the daily average.
  • Principal and rate remain unchanged.

What to keep in mind

  • No compounding is included.
  • Payment schedules and fees are excluded.
  • Actual products may use exact-day conventions.

Common questions

What is the difference from compound interest?

Simple interest never earns interest on earlier interest.

Can time be a decimal?

Yes. For example, 0.5 represents half a year.

What happens when time is zero?

Interest is zero and total equals principal.