Simple Interest Calculator

How it works

Simple interest charges interest on the original amount only, at a fixed yearly rate, for the length of the term:

interest = principal × (rate / 100) × term in years
total = principal + interest

The term is entered as years, months and days, and any of the three can be left empty. They are added up as a fraction of a year: a month is one twelfth of a year and a day is one 365th. The result also shows the interest for one full year, which is a handy rule of thumb: because the interest does not compound, every year earns the same amount.

term in years = years + months / 12 + days / 365

All amounts are handled as whole cents internally, not decimals. The interest is calculated once, from exact fractions, and rounded to the nearest cent (a tie rounds up). The total is always the principal plus that rounded interest, so the figures add up to the cent.

Day-count conventions: 365 or 360

The only place where two honest calculations of "the same" simple interest can disagree is the length of the year. This calculator divides days by 365. Some deposit and loan products divide by 360 instead. Take $25,000 at 18% for 45 days:

365-day year: 25,000 × 0.18 × 45 / 365 = 202,500 / 365 = $554.79
360-day year: 25,000 × 0.18 × 45 / 360 = 202,500 / 360 = $562.50

The 360 basis pays $7.71 more on the same days, because each day is worth a little more. To get the 360 result from this calculator, scale the rate by 365/360 and keep the days: 18 × 365 / 360 = 18.25%, and $25,000 at 18.25% for 45 days is 25,000 × 0.1825 × 45 / 365 = $562.50. The calculator rounds the rate to 0.01%, so round your scaled rate to two decimals.

From a simple rate to an effective annual rate

A simple rate is a yearly figure, but if the interest is paid out and the whole amount is put back at the same terms, the interest starts earning interest. Take 12% simple, rolled over every quarter:

rate per quarter = 12% / 4 = 3%
after four quarters = 1.03 × 1.03 × 1.03 × 1.03 = 1.12550881
effective annual rate ≈ 12.55%

Rolled over every six months it is 1.06 × 1.06 = 1.1236, or 12.36%. This only applies when the interest really is reinvested. If it stays a single simple-interest term, the effective yearly rate is the rate itself.

Examples

One year. $10,000 at 12% for 1 year earns $1,200, for a total of $11,200.

Months. $2,500 at 6% for 8 months earns 2,500 × 0.06 × 8 / 12 = $100.00.

Days. $10,000 at 12% for 90 days earns 10,000 × 0.12 × 90 / 365 = $295.89, about $3.29 a day.

A mixed term. $10,000 at 12% for 1 year, 2 months and 3 days earns $1,409.86.

Simple against compound. The same $10,000 at 12% for 5 years earns $6,000 of simple interest, so the total is $16,000. Compounded yearly it grows to $17,623.42, which is $1,623.42 more. The gap widens with every extra year:

years   simple interest   compounded yearly
2       $2,400            $2,544
5       $6,000            $7,623.42
10      $12,000           $21,058.48

(Compounded: 1.12² = 1.2544, 1.12⁵ = 1.76234168, 1.12¹⁰ = 3.10584821, each minus 1 and times $10,000.)

Closing early. $10,000 at 12% was meant to run a year but is closed on day 200. Interest for the days held: 10,000 × 0.12 × 200 / 365 = $657.53. Entering "6 months, 20 days" instead gives $665.75, because the calculator counts a month as 365/12 days, about 30.4. When you know the exact number of days, put them in the days field alone.

Things to watch for

• Simple interest never compounds. The interest of the first year does not earn interest of its own. If your deposit or loan adds interest back into the balance, use the compound interest calculator instead.
• Day counts differ between products. This calculator divides days by 365. Some banks and markets use 360, and some use the actual number of days in the year. The $4.11 gap on 90 days at 12% on $10,000 ($300.00 against $295.89) grows with the amount and the term.
• The rate is a yearly rate. If your rate is quoted per month, multiply it by 12 first. A monthly 1.5% is 18% a year: on $10,000 for 3 months that is 10,000 × 0.18 × 3 / 12 = $450.00. Typing 1.5 as if it were the yearly rate gives only $37.50. The multiplication by 12 is itself a simple-interest convention; if the monthly interest is added to the balance each month, the true yearly growth is higher (1.015¹² = 1.1956, about 19.56%).
• The result is gross. Taxes, withholding and account fees are not deducted, and the real amount you receive can be lower.
• Short terms look small, long terms grow in a straight line. Simple interest on a long term is easy to compare, but it understates what a compounding product would pay. Check the type of interest before comparing offers.
• The calculator is for information only. It applies a textbook formula; the figures a bank or lender actually gives you follow their own contract.
• Everything runs in your browser. The amounts you enter are not sent to a server.

To judge how an amount grows against another investment, see the ROI calculator.