Quick Tools
Compound Interest Calculator
See how savings grow with compounding and regular monthly contributions, year by year.
Open
Quick Tools
Simple Interest Calculator
Enter the principal, the yearly rate and the time in years, months or days to see the interest earned or owed and the final total.
- Years, months or days
- Formula shown
- Instant results
Simple interest
Interest is charged on the original amount only, so it grows by the same figure every year.
Time in
Interest earned
2,100.00
Principal10,000.00
Total amount12,100.00
Interest per year700.00
Time in years3
Simple interest is common in short-term loans, bonds and some car finance. Savings accounts usually compound instead.
Simple interest: the formula and when it is used
Simple interest is the most straightforward way to charge or earn interest. It is calculated only on the original amount, so the interest each year is always the same figure.
The formula
Simple interest = P x R x T / 100, where P is the principal, R is the yearly rate in percent and T is the time in years. The total amount is P plus the interest. Borrowing 10,000 at 7% for 3 years gives 10,000 x 7 x 3 / 100 = 2,100 of interest, for a total of 12,100.
If your period is in months or days, convert it to a fraction of a year first. Eight months is 8/12 of a year. The calculator does this when you switch the unit.
Simple versus compound interest
| Years | Simple interest total | Compound interest total |
|---|---|---|
| 1 | 10,700 | 10,700 |
| 5 | 13,500 | 14,026 |
| 10 | 17,000 | 19,672 |
| 20 | 24,000 | 38,697 |
Compound interest also earns interest on previous interest, so the gap widens with time. Simple interest is easier to predict, which is why it suits short-term arrangements.
Where simple interest appears
- Short-term personal loans between individuals or small lenders.
- Some car finance and student loan products that accrue interest on the principal.
- Bonds and notes that pay a fixed coupon each year.
- Exam questions, where it is the standard first example of interest.
Related calculators
See how growth accelerates with the Compound Interest Calculator. For repayment loans use the EMI Calculator or the Loan Calculator.
Frequently asked questions
What is the simple interest formula?
Interest = P x R x T / 100, with P the principal, R the yearly rate in percent and T the time in years.
How do I use months instead of years?
Divide the number of months by 12. Switch the unit to months in the calculator and it converts for you.
Keep going
Related resources
Hand-picked pages that pair well with this one.
Quick Tools
EMI Calculator
Calculate your monthly instalment, total interest and total repayment for any loan.
Open
Quick Tools
Loan Calculator
See your monthly loan payment and how much time and interest an extra monthly payment saves.
Open