What this calculator does
Find out how much interest you'll pay or earn when the interest is simple. Enter the amount, the yearly rate and how long, in years, months or days. You'll see the interest, the total, and what that works out to per year, per month and per day.
Simple interest is charged only on the amount you started with, called the principal. The interest is never added back in, so the amount grows by the same dollars each year. It's used for many short-term loans, notes, some bonds and certificates that pay out their interest. It also makes a handy quick estimate.
Savings accounts and most loans compound instead, which means interest is added to the balance and then earns interest itself. So the calculator also shows what the same rate would grow to if it compounded yearly, monthly or daily. A year-by-year table lets you compare the two.
Where it's used
Why this math matters outside the classroom:
- Short-term loans. Borrowing $2,000 at 5% simple interest for 3 years costs $300 in interest.
- Finding the rate. A $1,000 loan that costs $90 in interest over 2 years has a simple interest rate of 4.5% a year.
- Loans between family. Relatives agree on a flat yearly rate and work out the interest owed when the loan is repaid.
- Middle school lessons. Students multiply principal, rate and time and then compare the result with compound interest.
Grade level and standards: Grade 7; Common Core State Standards for Mathematics 7.RP.A.3. © Copyright 2010. National Governors Association Center for Best Practices and Council of Chief State School Officers. All rights reserved.
How to use it
- Enter the principal: the amount you borrowed or deposited.
- Enter the yearly interest rate as a percent.
- Enter how long, and choose years, months or days. For days, pick a 365-day or a 360-day year.
- Read the interest and the total. Then compare them with the compound figures and the year-by-year table.
What the inputs mean
- Principal
- The amount you start with. All the interest is figured on this number.
- Annual interest rate
- The interest rate for one year. Enter a yearly rate even if your time is in months or days.
- Time
- How long the money is borrowed or saved. The calculator counts 12 months in a year, and 365 days in a year (or 360 if you choose the banker's year).
- Days per year
- Some loans and money-market accounts count a year as 360 days. That makes each day's interest a little bigger. Check your agreement to see which one yours uses.
- Compare with compound interest
- The comparison takes the same yearly rate and splits it across each compounding period. It's only there for comparison, and it doesn't change the simple-interest answer.
Formula and method
I = P × r × t total = P + I t (years) = months ÷ 12, or days ÷ 365 (or ÷ 360) interest per day = P × r ÷ 365 (or ÷ 360) compound balance = P × (1 + r ÷ n)^(n × t), n = 1, 12 or 365
In the formulas, I is the interest, P is the principal and r is the yearly rate written as a decimal (4.5% is 0.045). t is the time in years, and n is how many times a year interest is compounded.
Because interest is never added to the principal, it grows in step with time. Twice as long means twice the interest.
Compound interest adds each period's interest to the balance, so later interest is earned on earlier interest. The compound figure is shown only for comparison. The gap between the two gets bigger as the rate and the time grow.
Worked example
You lend $5,000 at 4.5% simple interest for 3 years.
- Write the rate as a decimal: 4.5% = 0.045.
- Interest: $5,000 × 0.045 × 3 = $675. That's $225 a year, $18.75 a month or about $0.62 a day.
- Total: $5,000 + $675 = $5,675.
- If it compounded monthly instead: $5,000 × (1 + 0.045 ÷ 12)^36 ≈ $5,721.24, which is $46.24 more.
Result: The simple interest is $675, for a total of $5,675. Monthly compounding would add about $46.24 more. Over 18 months instead, the simple interest would be $337.50.
Understanding the result
The interest figure is the cost of borrowing, or what you earn by lending, for the whole period. It isn't a per-year figure.
At the same rate, simple interest is always the same as compound interest or lower. The gap widens the longer the money is out.
Assumptions and limitations
- The rate stays the same and is stated per year.
- Days are counted as part of a 365-day year. Some lenders use 360 days, which gives a slightly higher amount for the same number of days.
- Interest is paid or charged at the end. Nothing is paid back along the way.
- Fees, taxes and penalties aren't included.
- The compound comparison treats the rate as a stated yearly rate, compounded yearly, monthly or daily (365 times a year).
- Most savings accounts, credit cards and mortgages use compound interest, or pay the loan down over time. For those, this formula will understate the cost or the return.
- Results are estimates. Ask your lender or bank exactly how they figure interest and count days.
Frequently asked questions
What is the difference between simple and compound interest?
Simple interest is always figured on the amount you started with. Compound interest is figured on that amount plus the interest already earned, so it grows faster over time.
How do I calculate simple interest for a number of days?
Divide the days by 365 to get the time in years. Then multiply principal × rate × time. $5,000 at 4.5% for 365 days is $225; for 73 days it is $45.
Why do some lenders use a 360-day year?
It's an old banking habit that made the math easier. Dividing by 360 instead of 365 makes each day's interest a little larger, so the total for the same number of days is higher.
How much interest will I earn on $10,000?
Multiply by the rate and the time. At 4.5% simple interest, $10,000 earns $450 a year, or $1,350 over 3 years. If the account compounds monthly, as most savings accounts do, it earns a little more: about $1,442.48 over 3 years.
How do I work out the interest per month or per day?
Divide the yearly interest by 12 for a month, or by 365 for a day. $5,000 at 4.5% is $225 a year, so $18.75 a month and about $0.62 a day. A lender using a 360-day year would charge $0.625 a day.
How can I find the rate if I know the interest?
Turn the formula around: r = I ÷ (P × t). If $5,000 earned $675 in 3 years, the rate is 675 ÷ 15,000 = 0.045, or 4.5% a year.
How this calculator is checked
Method: Standard simple interest formula I = P × r × t. The calculation is covered by automated tests with known reference values and edge cases. Last updated 2026-10-18. Found a problem? Tell us.
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