Simple Interest Calculator

What the Simple Interest Calculator does

The Simple Interest Calculator works out interest earned or owed using the standard simple interest formula — principal × rate × time — along with the total payable amount, for loans or deposits that don't compound.

How to use it

1. Enter the principal amount.
2. Enter the annual interest rate as a percentage.
3. Enter the time period in years, then click Calculate Interest.

Common uses

• Working out interest owed on a short-term personal or informal loan.
• Estimating returns on a fixed deposit or savings product that uses simple interest.
• Checking coursework or exam problems involving simple interest calculations.
• Comparing a simple-interest loan offer against a compound-interest alternative.
• Quickly verifying an interest figure quoted by a lender or borrower.

Good to know

Simple interest is calculated only on the original principal for the entire term — unlike compound interest, it never earns interest on previously accrued interest, which generally makes it cheaper for borrowers and lower-yielding for savers than an equivalent compound rate. Most bank loans and long-term savings products actually use compound interest, so check which formula applies to your specific product before relying on this figure for a real financial decision.

The distinction between simple and compound interest matters more the longer the time period involved — over a short term the two produce very similar figures, but over years the gap widens considerably, since compound interest earns returns on previously accrued interest while simple interest never does. Most modern loans and savings products use compound interest, so simple interest calculations today are mostly relevant for short-term arrangements or specific financial instruments that are explicitly structured that way.