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Simple interest is the most basic interest model — interest is charged only on the principal, and no interest is earned on the accumulated interest. A single term of a fixed deposit, short-term notes, and many consumer accounts work this way. The formula is plain enough to do by hand, but day counting and matching the rate to the term easily cause errors, so a calculator is safer.
Enter your principal, annual rate and term (days, months or years), and the interest earned plus the maturity total appear instantly.
Simple Interest Calculator: step-by-step worked example
- Principal
- 10,000.00
- Annual interest rate (%)
- 5%
- Term
- 3
- Term unit
- Years
- 1
Convert the term to years
t = Term ÷ (12 months | 365 days | 1 year)
3 ÷ 1 = 3
- 2
Interest earned
Interest = Principal × Annual rate × t
10,000.00 × 0.05 × 3 = 1,500.00
- 3
Total at maturity
Total = Principal + Interest
10,000.00 + 1,500.00 = 11,500.00
- Principal10,000.0087%
- Interest1,500.0013%
- Balance:10,000.00 → 11,500.00
Good to know: Simple interest is paid on the principal only — interest does not earn interest. Taxes on interest, if any, are not deducted here.
Simple Interest Calculator — how it works
Formula
Interest = Principal × Annual Rate × Term. The term is expressed in years: enter days and it's divided by 365, enter months and it's divided by 12. So "180 days at 40%" applies close to half the annual rate (180/365).
What makes simple interest distinct
Interest is always computed on the same principal each period; earned interest is not added to it. 100,000 at 40% simple interest yields a flat 40,000 each year — 120,000 over three years. The same money earns more under compound interest, where interest also earns interest. For that difference see a compound interest calculator.
Where you encounter it
- Short-term (single-period) deposit interest
- Note and bill discounting, trade-credit maturity charges
- The single-period interest line in consumer loans
- Most late-payment interest (which runs simple)
For the compounding structure of loan instalments, a loan calculator is more suitable.
Worked example
Hold 100,000 at 40% simple interest for 180 days: interest = 100,000 × 0.40 × (180 ÷ 365) = 19,726.03, so at maturity you receive 119,726.03. Held for a full year the interest would be 40,000 — showing that halving the term nearly halves the interest (not exactly half, because of day counting). Over three years simple interest gives a total of 220,000; compound interest would reach 274,400.
Simple interest: maturity value of 10,000.00
| Annual rate | 1 year | 2 years | 3 years | 5 years |
|---|---|---|---|---|
| 10% | 11,000.00 | 12,000.00 | 13,000.00 | 15,000.00 |
| 20% | 12,000.00 | 14,000.00 | 16,000.00 | 20,000.00 |
| 30% | 13,000.00 | 16,000.00 | 19,000.00 | 25,000.00 |
| 40% | 14,000.00 | 18,000.00 | 22,000.00 | 30,000.00 |
| 50% | 15,000.00 | 20,000.00 | 25,000.00 | 35,000.00 |
Illustrative rates; taxes and fees excluded.
Frequently asked questions
How is simple interest calculated?+
With principal × annual rate × term. The term is in years: enter days and it's divided by 365, months by 12. For 100,000 at 40% over 180 days the interest is 19,726.03.
What is the difference between simple and compound interest?+
Simple interest always applies to the starting principal; compound interest adds earned interest to the principal so the next period earns on that too. Over the long run compound interest yields notably more.
How is interest calculated over a number of days?+
The day count is divided by 365 to convert to years and applied to the rate. 90 days of interest runs at about one quarter of the annual rate (90/365).
How do I convert a monthly rate to an annual one?+
Under simple interest, multiply the monthly rate by 12: 3% per month = 36% per year. You can also set the term to "months" in the tool and calculate monthly directly.
Is my deposit interest simple or compound?+
A single-term deposit (paid at maturity) uses simple interest. If the interest is added to the principal and reinvested over renewing terms, you effectively earn compound interest.
Is tax or withholding included in the interest?+
This tool computes gross interest. Deposit interest may have income-tax withholding deducted; to find your net return, subtract the applicable withholding from the gross interest.
About this page
- Publisher:
- Kalkoro — Teknolojig Bilişim Teknolojileri A.Ş., İstanbul
- Written by:
- Ahmet Tur — Editor (Math, date & time, unit conversion, physics & chemistry, everyday tools)
- Reviewed by:
- Kübra Yıldız — Editor
Parameters come from official sources; the last update date is shown at the bottom of the page.
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How we calculate and our accuracy policy →
Results are for information only and are not financial, legal or investment advice. For official matters the relevant authority's calculation and professional advice prevail.
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