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Simple Interest Calculator

Work out flat interest on a sum of money — interest on the original amount only — for a time in years, months or days, and see how it compares with interest that compounds.

Time in

Result

Simple interest

$1,500.00

Principal plus interest: $11,500.00

Principal
$10,000.00
Interest
$1,500.00
Total at the end
$11,500.00
Time in years (t)
3 years
Interest per year
$500.00
Interest per dayOn a 365-day year
$1.37
With interest compounded yearlyInterest added to the balance at the end of each full year
$11,576.25
Extra from compounding
$76.25
Show the working
  1. Interest = P × r × t$10,000.00 × 0.05 × 3 = $1,500.00
  2. Total = P + I$10,000.00 + $1,500.00 = $11,500.00
  3. Compounded yearly = P × (1 + r)^full years × (1 + r × part-year)$10,000.00 × (1 + 0.05)^3 = $11,576.25

Simple interest never earns interest on interest. Taxes and fees are not included.

Simple and compound interest over time

Balance at the end of each year with simple interest and with interest compounded once a year.. Scroll sideways to see all columns.
YearSimpleCompounded yearlyDifference
1$10,500.00$10,500.00$0.00
2$11,000.00$11,025.00$25.00
3$11,500.00$11,576.25$76.25

Balance at the end of each year with simple interest and with interest compounded once a year.

Results are estimates for planning and education, not financial, tax or legal advice. Lenders, tax authorities and products apply their own rules and rounding.

What simple interest is

Simple interest is charged or earned only on the original amount, the principal. It does not matter how long the money has been there: every year produces the same interest, because interest that has already been earned never earns interest itself. The balance grows in a straight line.

You meet simple interest in several places:

  • short-term loans and promissory notes that are repaid in one go with interest,
  • loans that work out interest each day on the balance outstanding,
  • bonds and some certificates of deposit that pay interest out to you instead of adding it to the balance,
  • money-market and interbank rates, which are usually quoted on a 360-day year.

Compound interest, by contrast, adds interest to the balance so it earns interest too. The comparison lines in the result show how far the two drift apart for your numbers.

The simple interest formula

I = P × r × t

A = P + I = P × (1 + r × t)

I
interest
P
principal
r
annual interest rate as a decimal (5% → 0.05)
t
time in years
A
principal plus interest

The rate is yearly, so the time must be in years too:

  • months: t = months ÷ 12 (18 months → 1.5)
  • days on a 365-day year (Actual/365): t = days ÷ 365
  • days on a 360-day year (Actual/360): t = days ÷ 360

A 360-day year makes each day worth 1/360 of a year’s interest instead of 1/365, so the same number of days earns about 1.4% more interest (365 ÷ 360 = 1.0139). It is a long-standing convention in money markets: US Treasury floating rate notes, for example, accrue interest on an actual/360 basis.

For the comparison, interest compounded once a year is added to the balance at the end of every full year; a part-year left at the end earns simple interest, which is how an account that credits interest yearly behaves between crediting dates. So for less than a year, the two are equal.

Worked examples

$10,000 at 5% for 3 years:

  1. Interest: $10,000 × 0.05 × 3 = $1,500.00
  2. Total: $10,000 + $1,500 = $11,500.00, and interest per day is $500 ÷ 365 = $1.37
  3. Compounded yearly instead: $10,000 × 1.05³ = $11,576.25, which is $76.25 more

$10,000 at 5% for 90 days:

  1. On a 365-day year: $10,000 × 0.05 × 90 ÷ 365 = $123.29
  2. On a 360-day year: $10,000 × 0.05 × 90 ÷ 360 = $125.00

Over longer periods the gap to compounding widens: after 10 years simple interest gives $15,000.00, yearly compounding $16,288.95.

Things to keep in mind

  • Loans that are repaid in installments charge interest on a shrinking balance. Multiplying the original amount by the rate and the term overstates their cost; use the loan calculator for those.
  • Counting days. Day counts usually include either the start date or the end date, not both; check the agreement for how your lender or bank counts. The days between dates calculator counts them for you.
  • A flat-rate quote is not an APR. Some lenders quote a “flat” rate on the original amount for the whole term. Because the balance falls as you repay, the true annual rate is considerably higher.

To see interest that is added to the balance monthly, daily or continuously, use the compound interest calculator.

Frequently asked questions

How do I calculate simple interest for months?

Divide the number of months by 12 to get the time in years, then multiply principal × rate × time. For $10,000 at 5% for 18 months: $10,000 × 0.05 × 1.5 = $750.

Should I use 365 or 360 days in a year?

Use whatever your agreement says. Savings accounts and many loans use 365 days. Some commercial loans and money-market instruments use 360, which makes each day’s interest slightly larger: 90 days on $10,000 at 5% is $123.29 on a 365-day year and $125.00 on a 360-day year.

Is simple interest better than compound interest?

It depends on which side you are on. When you borrow, simple interest costs less because interest never builds on interest. When you save, compounding earns more. For less than a year the two are the same if interest is compounded once a year.

How do I find the interest per day?

Divide one year’s interest by the number of days in the year: principal × rate ÷ 365 (or ÷ 360). On $10,000 at 5% that is $500 ÷ 365 = $1.37 a day.

Sources

Last reviewed September 15, 2026