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How to use
Calculate simple interest on the original principal only, without compounding previously earned interest. Choose years, months or days for the time period and see both the interest amount and ending total, with the distinction from compound interest kept explicit.
- Enter the principal amount.
- Enter the annual rate as a percentage.
- Enter the duration, choose years, months or days, and calculate.
How it is calculated
Example
Example: 10,000 at 6% per year for 18 months equals 1.5 years. Simple interest is 10,000 × 0.06 × 1.5 = 900, so the ending amount is 10,900. With principal 8,000 at 4% annually, 6 months is 0.5 years: interest is 8000×0.04×0.5=160 and ending amount is 8,160. For 90 days at the same principal and rate, this tool uses 90÷365 years, producing about 78.9041 interest. A different day-count basis changes the result; match the agreement's basis before applying the example.
Important notes
Use this tool only when the arrangement truly uses simple interest. Many loans and deposits use compounding or a different repayment method. Day-based periods are converted using 365 days for a general estimate.
Worked examples and interpreting results
A principal of 1000 at assumed 6% simple annual interest for 18 months earns 90 and ends at 1090. Simple interest does not add earlier interest to the base.
| Case | Calculation | Result |
|---|---|---|
| Simple interest | 1000 × 0.06 × (18 ÷ 12) | 90 |
| Ending amount | 1000 + 90 | 1,090 |
| Interest on 8,000 at 4% annually for 6 months | 8000 × 0.04 × (6 ÷ 12) | 160 |
| Same principal and rate for 90 days using a 365-day basis | 8000 × 0.04 × (90 ÷ 365) | 78.90411 |
How to check the result
Choose months and enter 18, not 1.5. The day option uses a 365-day year; contractual day-count conventions can differ, so it is not automatically identical to every financial product.
Simple interest and final balance
Simple interest equals principal multiplied by annual interest rate and the number of years. Convert rates to decimals and months into fractions of years.
- 1000 at 5% for 2 years: 1000 × 0.05 × 2 = 100
- Final amount after 2 years: 1000 + 100 = 1100
- 2000 at 3% for half a year: 2000 × 0.03 × 0.5 = 30
Important note
Simple interest does not compound prior interest; real loan fees and repayment schedules may change costs.
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Frequently asked questions
How is simple interest different from compound interest?
Simple interest is calculated only on the original principal; compound interest also earns or charges interest on accumulated interest.
How do I enter six months?
Choose months and enter 6; the calculator converts it to half a year automatically.
Can I use a negative rate?
This tool is designed for ordinary non-negative simple-interest scenarios and rejects negative rates.
Do I enter 4 or 0.04 for a 4% rate?
Enter 4 in the annual percentage-rate field. The calculator converts it to 0.04 in the formula; entering 0.04 means a 0.04% rate.
Does the result include fees or installment repayments?
No. I=P×r×t assumes a fixed principal and simple interest only. Fees, principal repayments and compounding require their own applicable models.