Simple Interest Calculator
Calculate non-compounding simple interest using I = P × r × t. Choose days, months, or years and see the daily, monthly, and yearly breakdown.
What this calculator does
This calculator returns the simple-interest amount and the total balance for a given principal, annual rate, and time period. Time can be entered in days, months, or years; the calculator shows the converted time-in-years value it uses internally and the per-day, per-month, and per-year accrual. There is no compounding on this page — for compounding growth, use the Compound Interest Calculator.
Formula
I = P × r × t
A = P + I
Variable definitions
I— Simple interest accrued over the period.P— Principal — the original amount.r— Annual interest rate as a decimal (e.g. 0.05 for 5%).t— Time in years (days ÷ 365 or ÷ 360; months ÷ 12).A— Total amount = principal + interest.
Step-by-step calculation
- Convert the rate from a percent to a decimal:
r = rate% / 100. - Convert the time to years: days ÷ 365 (or ÷ 360), months ÷ 12, years as-is.
- Multiply:
I = P × r × t. - Add to principal:
A = P + I.
Worked example
Principal = $5,000, rate = 4% annual, time = 3 years.
- r = 0.04, t = 3
- I = 5,000 × 0.04 × 3 = $600.00
- A = 5,000 + 600 = $5,600.00
- Per-year interest = $200; per-month ≈ $16.67; per-day ≈ $0.55
How to use this calculator
- Enter principal in dollars.
- Enter the annual rate as a percent.
- Enter the time and pick days, months, or years.
- For banking-style accrual, switch the day-count to Actual/360.
Common mistakes
- Treating monthly or daily rates as annual: always enter the annual rate; the calculator handles the conversion.
- Using simple interest for compounding scenarios: savings, mortgages, and credit cards almost always compound. Switch to the Compound Interest Calculator.
- Forgetting day-count convention: Actual/360 produces slightly more interest per actual day than Actual/365.
Frequently asked questions
›What is simple interest?
Simple interest is interest calculated only on the original principal — it does not compound. The same dollar amount of interest accrues each year (or each period) for the life of the loan or deposit.
›What is the simple interest formula?
I = P × r × t, where P is the principal, r is the annual rate as a decimal, and t is the time in years. The total amount owed or earned is A = P + I.
›How are days and months converted to years?
Days are divided by 365 (or 360 if you select the bank-style day count). Months are divided by 12. The calculator shows the time-in-years value it actually used.
›When is simple interest used in the real world?
Short-term promissory notes, certain auto loans, some personal loans, accrued bond coupon interest between payments, and many invoice late-fee calculations use simple interest. Savings accounts and credit cards usually compound.
›How is simple interest different from compound interest?
Simple interest accrues only on the original principal. Compound interest accrues on principal plus all previously accumulated interest, so the total grows faster over time. For compounding, use the Compound Interest Calculator.
›Does this calculator compound or accrue interest on interest?
No. This page is strictly simple interest. If you need compounding, use the Compound Interest Calculator or the Future Value Calculator.
›Why use 360 days instead of 365?
Banking conventions (Actual/360) treat a year as 360 days, which slightly increases the interest rate per actual day. The toggle lets you match a specific lender's day-count convention.
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