Borrowing
Simple Interest Calculator
Work out simple interest on a loan or deposit for a term in years, months or days, on an actual/365 or actual/360 basis, and compare it with compounding.
Interest over 3 years
$1,500.00
$11,500.00 in all, principal plus interest
Total repaid or received
$11,500.00
$10,000.00 principal
Interest a year
$500.00
5% of the principal, the same every year
Interest a day
$1.3699
Annual interest ÷ 365
How $1,500.00 was worked out
Interest = principal × rate × years = $10,000.00 × 0.05 × 3 = $1,500.00. The interest is charged on the original $10,000.00 throughout, never on interest already added.
What compounding would have added: $76.25
Compounded once a year, the same $10,000.00 at 5% earns $1,576.25 over the term, because each year's interest earns interest itself. The gap grows with the rate and, faster, with time.
Fixed rate, no fees. An estimate, not financial advice, providers may calculate differently.
- Simple interest
- Compounded yearly
The balance each year
| Year | Simple interest | Compounded yearly |
|---|---|---|
| 1 | $10,500.00 | $10,500.00 |
| 2 | $11,000.00 | $11,025.00 |
| 3 | $11,500.00 | $11,576.25 |
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How this is calculated
The calculator charges the annual rate on the principal alone, for the length of the term, and adds nothing to the balance until the end: interest never earns interest. A term in months is converted to years by dividing by twelve, and a term in days by the number of days your agreement puts in a year, either the calendar's 365 or the money market's 360. Beside the result it shows what the same sum would have produced with the interest compounded once a year, so you can see how much the simple method saves a borrower or costs a saver.
IP × r × t
- I
- the interest
- P
- Principal
- r
- Annual interest rate, as a decimal
- t
- the Term in years: months ÷ 12, or days ÷ 365 or 360
What this does not include
- Repayments during the term: the principal is assumed to stay outstanding throughout.
- Fees and charges other than interest.
- Tax on interest earned.
- Leap years: a term in days uses the basis you choose, not the calendar.
How this calculator works
Simple interest explained: the formula, day counts and when it applies. How I = P × r × t works for terms in years, months and days, why actual/360 charges more than actual/365, and where simple interest is used in practice.
This calculator is for general information only and is not financial advice. Results are estimates based on the figures you enter and the stated formula; lenders and providers may round or calculate differently. Check any decision with the institution involved or a qualified adviser.