Simple Interest Calculator (General Version)

Simple interest calculator for loans and short-term interest estimates

This simple interest calculator is built for one job: estimating the interest amount and final total when interest is calculated on the original principal only. That is the key point. If your bank account, investment, or loan adds interest on top of previous interest (compounding), this page is not the right tool. Use it when the deal is described as “simple interest,” when interest is charged as a flat percentage of the starting amount, or when you want a fast approximation that stays easy to audit.

To use it, enter the principal amount, the annual interest rate, and the time period. The calculator converts the time you enter (years, months, or days) into a year fraction, then applies the standard formula: Interest = Principal × (Annual Rate) × Time. The main result shows the simple interest amount and the total amount (principal plus interest). It also shows monthly and daily interest estimates, which helps when you are trying to sanity-check a quote, compare two options with different terms, or translate an annual rate into something you can “feel” in real money.

The “Advanced” option exists for one reason only: day-count basis. Some products treat a year as 365 days, while others use a 360-day convention (common in some lending contexts). If you are working in days and you know the contract uses a 360-day year, choose 360 so the time conversion matches what is typically used in those agreements. If you do not know, leave the default at 365. If you are entering time in months or years, the day-count basis does not change the result.

Assumptions and how to use this calculator

• This calculator assumes simple interest, meaning interest is calculated on the original principal only and does not compound.
• The interest rate is treated as an annual nominal rate (APR-style). It does not include compounding frequency because compounding is excluded by design.
• If you enter months, time is converted using months ÷ 12. If you enter days, time is converted using days ÷ (365 or 360) based on your selection.
• Fees, initiation costs, service charges, taxes, and penalties are not included. Add them separately if your product includes them.
• The monthly and daily figures are simple averages across the term. They are useful for understanding scale, not for creating a payment schedule.

Common questions

What is the difference between simple interest and compound interest?

Simple interest applies the rate to the starting principal only. Compound interest applies the rate to the principal plus previously earned interest, so the interest itself starts earning interest. If your balance grows faster than a straight line over time, you are almost certainly dealing with compounding, and this calculator will understate the final amount.

Can I use this for a loan with monthly payments?

Only as a rough estimate of total interest if the loan is truly simple interest and interest is not recalculated on a declining balance. Most amortized loans (where you pay down principal over time) do not behave like this. In those cases, the interest charged depends on the remaining balance each period, so a repayment or amortization calculator is the correct tool.

Why does changing the time unit change the result slightly sometimes?

If you switch between months and days, you are changing how the year fraction is computed. Months are converted as months ÷ 12. Days are converted as days ÷ 365 (or ÷ 360 if selected). Because real months have different lengths, these are approximations. For agreements written in months or years, stick to months or years. For agreements written in days, use days and set the correct day-count basis if you know it.

What does the “interest per month” figure mean if there are no monthly payments?

It is an average: total simple interest divided by the number of months in the term. It is not a payment amount and it does not imply a monthly compounding process. It is there to make annual rates more interpretable and to help you compare options quickly.

How can I make the estimate more accurate?

Match the calculator inputs to how the product is quoted. Use the exact term unit (days vs months vs years), use the correct day-count basis when the contract specifies it, and keep the annual rate as quoted (do not convert it into a monthly rate unless the product is explicitly priced that way). If the product includes fees or recurring charges, add them to your final comparison separately because they can dominate the effective cost even when the rate looks low.