Simple Interest Calculator
Compute simple interest on a principal at a fixed annual rate over any time period. Unlike compound interest, simple interest is calculated only on the original principal — never on accumulated interest.
Enter interest details
Enter principal, rate and time, then press Calculate interest.
Simple interest formula
I = P × r × t
Where:
I= interest earned or paidP= principalr= annual interest rate as a decimal (rate% ÷ 100)t= time in years
For time measured in months or days, convert first: t = months / 12 or t = days / 365.
Worked examples
Example 1 — Three-year loan
£10,000 at 5% simple interest for 3 years.
I = 10000 × 0.05 × 3 = £1,500. Total amount owed: £11,500.
Interest = £1,500
Example 2 — Six-month period
£2,000 at 4% simple interest for 6 months.
I = 2000 × 0.04 × 0.5 = £40.
Interest = £40
Example 3 — Days
£5,000 at 3% for 90 days.
I = 5000 × 0.03 × 90/365 ≈ £36.99.
Interest ≈ £36.99
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Frequently asked questions
Simple interest is used for short-term loans, car loans (some jurisdictions), and certain bonds. It is also the standard for annual percentage yield calculations on some savings accounts and for penalty interest on overdue invoices.
Compound interest earns interest on the accumulated interest as well as on the original principal, so the total grows faster — exponentially rather than linearly. Over long periods the difference is dramatic. For a £10,000 investment at 5% over 20 years, simple interest earns £10,000 while compound interest earns about £16,533.