Simple Interest Calculator
Simple interest is non-compound interest. You earn or pay it on the principal only, never on interest from earlier periods. To calculate it, multiply the principal by the annual rate and by the time in years: I = P × r × t. Enter the principal, the annual rate and a term in years, months or days below for the non-compounded interest and the total with principal.
How to use the Simple Interest Calculator
- Enter the principal and the annual interest rate in percent. Pick another currency if you are not working in US dollars.
- Enter the time and set the time unit to years, months or days. A month counts as 1/12 of a year and a day as 1/365 of a year.
- Press Calculate to see the interest for the whole term and the total amount, which is the principal plus that interest. For months and days the result also shows the share of a year it used, such as "90 days, counted as 90/365 of a year".
The simple interest formula
I = P × r × t · · · A = P + I
P is the principal, r is the annual rate as a decimal, so 6% is 0.06, and t is the time in years. A term in months is months ÷ 12 of a year, and a term in days is days ÷ 365 of a year. I is the interest for the whole term and A is the total you end up with. Nothing compounds, so every year adds the same amount, P × r. The calculator assumes the principal stays the same for the whole term. A total above 50 trillion gets a message.
Worked example: $5,000 at 6% for 3 years
The numbers are an example, not a quoted rate. Principal P = $5,000, annual rate r = 6% or 0.06, time t = 3 years. Interest: I = 5,000 × 0.06 × 3 = $900.00. Total: A = 5,000 + 900 = $5,900.00. Enter 5000, 6 and 3 in the calculator above with the time unit on Years and it returns the same two figures.
Simple interest for months or days
A loan or deposit that runs for less than a year uses the same formula. The rate is still a rate per year, so only t changes. For months, t is months ÷ 12. For days, t is days ÷ 365.
Take $5,000 at 6% for 90 days. One year of interest is 5,000 × 0.06 = $300.00. Ninety days is 90/365 of a year, so I = 300 × 90 ÷ 365 = $73.97 to the nearest cent, and the total is 5,000 + 73.97 = $5,073.97. Enter 5000, 6 and 90 in the calculator, set the time unit to Days, and it returns the same two figures.
| Term | Share of a year | Interest | Total |
|---|---|---|---|
| 30 days | 30/365 | $24.66 | $5,024.66 |
| 90 days | 90/365 | $73.97 | $5,073.97 |
| 180 days | 180/365 | $147.95 | $5,147.95 |
| 6 months | 6/12 | $150.00 | $5,150.00 |
| 9 months | 9/12 | $225.00 | $5,225.00 |
Six months is not 180 days
Months and days give different answers for what sounds like the same term. Six months counts as half a year, so the example earns $150.00. 180 days counts as 180/365 of a year, a little under half, and earns $147.95. Use the unit your loan or deposit terms state.
Non-compound interest vs. compound interest
Non-compound interest pays on the original principal every year and on nothing else. Compound interest adds each year's interest to the balance, so the next year pays interest on a larger amount.
Take the example again, $5,000 at 6% for 3 years. Simple interest is $300.00 in each year and $900.00 in total. With annual compounding, year 1 also pays $300.00. Year 2 pays 6% of $5,300, which is $318.00, and year 3 pays 6% of $5,618, which is $337.08. The interest comes to $955.08 and the balance to 5,000 × 1.06^3 = $5,955.08. Compounding adds $55.08.
To check the compound figure, enter 5000, 6 and 3 in the compound interest calculator, set Compounding Frequency to Annually and leave Monthly Contribution at 0.
| Period | Simple interest | Annual compounding |
|---|---|---|
| Year 1 | $300.00 | $300.00 |
| Year 2 | $300.00 | $318.00 |
| Year 3 | $300.00 | $337.08 |
| Total interest | $900.00 | $955.08 |
| Balance after 3 years | $5,900.00 | $5,955.08 |
The gap widens with time
Stretch the same example to 10 years. Simple interest is 5,000 × 0.06 × 10 = $3,000.00. Annual compounding pays $3,954.24, which is $954.24 more. Over 3 years the gap was $55.08. A long loan costs less at simple interest than with compounding, and long-term savings earn more in an account that compounds.
Frequently asked questions
What is non-compound interest?
Non-compound interest is another name for simple interest. It is calculated on the original principal only, so every year adds the same amount. The interest is principal × annual rate × years, and the total is the principal plus that interest. An example: $5,000 at 6% earns $300 in year 1 and $300 again in year 3.
When is simple interest used?
Many auto loans and some short-term personal loans charge simple interest on the principal you still owe. Bonds that pay a fixed coupon work the same way, because each coupon is a percentage of the face value. Most savings accounts compound instead.
Is simple interest better for borrowers or lenders?
For borrowers. Over any term longer than one compounding period, simple interest comes to less than compound interest at the same rate. In the example on this page the difference is $55.08 over three years. On a deposit it works against you, because you earn less without compounding.
Does the calculator work for a loan with monthly payments?
No. It assumes the principal stays the same for the whole term and you repay everything at the end. Each payment on an installment loan lowers the principal, so the total interest is less than P × r × t. For that case, use the loan calculator.
How do I calculate simple interest for months or days?
Convert the term to years. Divide months by 12, so 9 months is 0.75 years, and $5,000 at 6% for 9 months is 5,000 × 0.06 × 0.75 = $225.00. Divide days by 365, so the same principal and rate for 90 days give 5,000 × 0.06 × 90 ÷ 365 = $73.97. The calculator does the conversion when you set the time unit to months or days.
Does the calculator use a 365-day or a 360-day year?
A 365-day year. Each day counts as 1/365 of a year, in a leap year too. Some loans are written on a 360-day year, which gives a little more interest for the same days. In the example, $5,000 at 6% for 90 days is 5,000 × 0.06 × 90 ÷ 365 = $73.97 on a 365-day year and 5,000 × 0.06 × 90 ÷ 360 = $75.00 on a 360-day year, which is $1.03 more. For a 360-day year or the time between two dates, use the interest calculator.