Simple Interest Calculator

Simple interest calculator for quick savings and loan estimates

Simple interest is the most straightforward way to estimate how money grows (or how interest charges accumulate) over time. This calculator is built for normal, real-world use when you want a fast answer without getting pulled into complicated compounding schedules, fee structures, or bank-specific terms. You enter a principal amount (the starting balance), an annual interest rate, and a time period. The calculator then outputs the interest amount and the total amount at the end of the period.

Simple interest means the interest is calculated only on the original principal. The interest does not “earn interest” on itself. That makes it useful for rough planning, short-term comparisons, and sanity checks. It is also commonly used in certain contexts such as some short-term loans, some informal lending arrangements, and basic classroom or exam problems. If your product is compound interest (most savings accounts and many investments), this calculator will likely understate growth over longer periods because compounding adds extra interest on top of prior interest.

To use the calculator, start with the principal amount. This is the balance you put in, invest, or borrow. Next, enter the annual interest rate as a percentage. If you have a monthly rate, convert it to an annual rate before using the calculator, or use the time-unit selector and treat the annual rate as the given input while changing the time to match the unit you want to model. Finally, enter the time number and choose whether it is in years, months, or days. The calculator converts months and days into a fraction of a year so the annual rate stays consistent. You will see two key outputs: the interest earned or charged, and the final total amount (principal plus interest).

Assumptions and how to use this calculator

• The calculator uses simple interest: Interest = Principal × (Rate ÷ 100) × Time (in years).
• Months are converted to years using 12 months per year; days are converted using 365 days per year.
• The interest rate is treated as an annual nominal rate for estimation purposes.
• Fees, taxes, inflation, and deposit or withdrawal timing are not included.
• Results are estimates; real products may calculate interest differently (daily accrual, compounding, minimum balances).

Common questions

What is the difference between simple interest and compound interest?

Simple interest is calculated only on the original principal. Compound interest is calculated on the principal plus previously earned interest. Over short periods the difference can be small, but over long periods compounding usually produces a higher total. If you are estimating a bank savings account or an investment fund, compounding is usually the better match. If you are doing a quick back-of-the-envelope calculation or dealing with a product explicitly described as “simple interest,” this calculator is appropriate.

When should I use months or days instead of years?

Use months or days when your time period is short or when the situation you are modelling is naturally described in those units. For example, if you are saving for a goal that is 6 months away, it is cleaner to enter 6 months than 0.5 years. Similarly, for a 90-day short-term loan, entering days avoids mental conversion. The calculator converts your input into a fraction of a year so the annual rate still applies consistently.

Does this include inflation or taxes?

No. Inflation reduces the real purchasing power of your future total, and taxes can reduce your net interest earned depending on your local rules and product type. This calculator is designed to show the “math-only” interest outcome. If you want a real-world planning view, treat the output as a starting point and then adjust separately for expected inflation and any taxes or fees you know apply.

Why might my bank’s numbers differ from this calculator?

Banks and providers may calculate interest daily, may compound monthly or daily, may apply minimum balance rules, and may include fees. Some products also quote an annual rate that is effective (already includes compounding) rather than nominal. Any of those differences can move the final outcome. Use this calculator as a baseline estimate, then compare it to your provider’s disclosure terms to understand where the gap comes from.

Can I use this to estimate interest on a loan?

Yes, as a simple estimate. If the loan is explicitly simple interest, the result can be fairly close. If the loan uses amortized repayments, compounding, or interest calculated on a declining balance, your true cost will differ. In that case, this calculator still helps you build intuition for how principal, rate, and time interact, but it should not replace a proper loan payment or amortization calculation.