Simple Interest Calculator
Work out interest on a loan or deposit when interest is only charged on the original amount.
What simple interest means
Simple interest is charged or earned only on the original amount, called the principal. The interest never gets added back and earns more interest, which makes the maths easy and the growth steady.
The formula
Interest = P × r × t, where P is the principal, r is the yearly rate as a decimal and t is the time in years. The total amount is P plus the interest.
Example
Borrow or deposit 5,000 at 4% a year for 3 years: 5,000 × 0.04 × 3 = 600. The total is 5,600. For 18 months, enter 1.5 years.
Short personal loans, some bonds and many car loans quote simple interest. Savings accounts usually compound, so use the compound interest calculator for those.
Frequently asked questions
Can I use months instead of years?
Yes. Divide the months by 12 and enter the result, for example 18 months is 1.5 years.
Is simple interest better for borrowers?
For the same rate and term, simple interest costs a borrower less than compound interest. For savers it earns less.
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