Simple Interest Calculator

What formula does this tool use?

This tool uses I = P × R × T ÷ 100, where P is the principal, R is the annual rate in percent and T is the time in years. The total amount is P + I. The Rate × Time row is R × T, the percentage of the principal that the whole period adds.

What makes simple interest different from compound interest?

Interest is always charged on the original principal only, never on interest already added. The same amount is added every year: 10,000 at 5% gives 500 a year, so 1,500 after three years and 5,000 after ten. Compound interest would add a larger amount each year.

How do I enter months or days?

Convert them to years yourself. Six months is 0.5 and a quarter-year is 0.25, so 2,500 at 7.5% for six months gives 93.75, and 1,200 at 18% for three months gives 54.00. For days, divide by 365 or by whatever day-count your agreement specifies; the tool has no day-count setting.

Is the rate a percentage?

Yes, enter 5 for 5% per year. A rate typed as 0.05 would be read as 0.05% and give one hundredth of the expected interest. The rate is applied per year, so a monthly rate has to be multiplied by 12 first.

What does it show at a 0% rate?

Zero interest, with the total equal to the principal: 800 at 0% for four years returns 800.00. A zero is treated as a real input, not as missing. Negative values are not blocked, so a negative rate subtracts from the principal.

Does the label “Total Interest Earned” apply to loans too?

The arithmetic is the same either way. For money you borrow, read the interest line as the cost of borrowing and the total as the amount to repay if nothing is paid back before the end. The tool does not model instalments or early repayment.

What is left out?

Compounding, fees, tax, inflation and any payments made along the way. The result is an illustration of the formula applied to your inputs and is not a forecast or advice. It also assumes the rate is fixed for the whole period.