Work out simple interest on a loan or deposit, measure time in days, months or years, and compare simple interest with compound interest.
Basic Simple Interest Calculation
Advanced Simple Interest Analysis
Simple vs Compound Interest Comparison
What this simple interest calculator does
- Basic: principal, annual rate and years to the interest, final amount and monthly interest.
- Intermediate: time in days, months or years, an actual (365-day) or banking (360-day) year, and interest shown weekly, monthly, quarterly or annually.
- Advanced: compares simple interest with compound interest over whole years, with optional yearly contributions.
How it is calculated
Simple interest = principal × rate × time in years ÷ 100 (with the rate as a percentage). It is charged on the original principal only, not on interest already earned. For a period in days, time = days ÷ 365 (or 360 on a banking basis).
Worked examples: $10,000 at 5% for 3 years earns $1,500, so the final amount is $11,500. For 90 days it is $123.29 on a 365-day year or $125.00 on a 360-day year. In the Advanced tab, $10,000 at 5% for 10 years with $1,000 added at the end of each year earns $7,250 of simple interest, compared with about $9,116 compounded monthly, a difference of about $1,866.
Things to keep in mind
The Advanced tab works in whole years and adds contributions at the end of each year, so simple interest is earned only on contributions already made. These results are estimates for general information only and are not financial, tax, investment or legal advice. Real products have fees, rules and rates that differ, so check the details with your lender, provider or a qualified adviser.
Frequently asked questions
What is the difference between simple and compound interest?
Simple interest is calculated only on the original amount. Compound interest is also calculated on interest already earned, so it grows faster.
Why do banks use a 360-day year?
Some loans and deposits use a 360-day basis by convention, which gives slightly more interest per day than a 365-day year.
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