Simple Interest Calculator
The easiest way to calculate investment returns or loan costs. Understand exactly how much interest accumulates over time without complexity.
Back to Basics: Pure Growth
In a world obsessed with compound growth, Simple Interest remains the foundation of finance. It is straightforward, linear, and easy to understand. Whether you differ a payment to a friend, calculating the return on a bond, or checking a short-term bank loan, our Simple Interest Calculator gives you the raw numbers instantly.
What is Simple Interest?
**Simple Interest** is a method of calculating the interest charge on a loan or the interest income on an investment. It is determined by multiplying the daily interest rate by the principal by the number of days that elapse between payments.
Key characteristic: The amount of interest paid or earned in each period is constant because the principal remains constant.
The Formula Explained
We use the standard formula:
Where:
A = Total Accrued Amount (Principal + Interest)
P = Principal Amount
r = Rate of Interest per year (decimal)
t = Time Period in years
Personal Loans
Lending money to a family member? Agree on a simple interest rate (e.g., 5% per year) to keep the math easy and fair for everyone.
Car Loans
Some auto loans use "Simple Interest" contracts where interest accrues daily on the remaining balance. Paying early saves you money!
Bonds
Many bonds pay "coupon" payments which are essentially simple interest payments on the face value of the bond.
Frequently Asked Questions
Can I lose money with simple interest?
If you are investing, no. You will earn the interest rate promised. However, if the inflation rate is higher than your simple interest rate, your "real" purchasing power may go down.
Is simple interest better for borrowers?
Yes, typically. Since interest doesn't compound (interest on interest), the total amount paid back is usually lower than with compound interest loans, especially over long periods.
How do I convert monthly rate to annual?
Simply multiply the monthly rate by 12. If you are charged 1% per month, the annual simple interest rate is 12%.
Calculation Accuracy
Calculations adhere to standard simple interest formulas. Actual bank products may calculate interest on a 360 or 365-day basis.
Data Privacy
We do not store your data. This calculator runs entirely in your browser.