Simple Interest Calculator
This simple interest calculator applies the classic formula I = P × r × t. Enter the principal, the interest rate per year, month or day, and either a length of time or a start and end date. You get the interest, the total amount due, the time in years and, for comparison, what the same rate would earn if the interest were compounded.
Updated
Results
- Principal + interest
- Term in years
- Days countedShown in date mode
- Compound interest (same rate and term)Compounded once per rate period
- Compound minus simpleNegative when the term is under one rate period
Results are estimates. See the methodology below.
How to use the calculator
- Principal: the amount borrowed, lent or invested.
- Interest rate and rate period: type the rate and say whether it is per year (the usual case in the US), per month or per day.
- Time: choose Duration to enter a number of years, months or days, or Dates to enter a start and end date.
- Day count (advanced, dates only): Actual/365, Actual/360 or 30/360. Leave Actual/365 unless your contract says otherwise.
The results show the simple interest, principal plus interest, the term converted to years, the number of days counted (date mode only), the compound interest for the same rate and term, and the gap between the two.
The simple interest formula
I = P × r × t and A = P + I
P is the principal, r the rate as a decimal and t the time expressed in the same unit as the rate. Interest is always calculated on the original principal; earned interest is never added to the balance, so it grows in a straight line.
The calculator first converts the term to years (months ÷ 12, days ÷ 365) and then multiplies by the number of rate periods per year: 1 for an annual rate, 12 for a monthly rate, 365 for a daily rate. In date mode the term depends on the day count:
- Actual/365: actual calendar days ÷ 365.
- Actual/360: actual days ÷ 360, common for money-market instruments; it yields slightly more interest.
- 30/360: every month counts as 30 days and the year as 360.
With a daily rate in date mode, the number of periods is simply the number of days counted.
The comparison uses P × ((1 + r)^n − 1), where n is the number of rate periods, i.e. interest compounded once per rate period. Fees, taxes and partial repayments are not included.
Worked examples
1. $10,000 at 5% a year for 3 years
Interest is 10,000 × 0.05 × 3 = $1,500.00, so the total is $11,500.00. With yearly compounding the same money would earn $1,576.25, or $76.25 more. Stretch the term to 10 years and the gap widens: $5,000.00 simple versus $6,288.95 compound, a difference of $1,288.95.
2. $5,000 at 6% for 18 months
Enter 18 months: the calculator converts it to 1.5 years, and the interest is $450.00 for a total of $5,450.00.
3. $2,500 from March 1 to September 30, 2026 at 4.5%
| Day count | Days | Interest |
|---|---|---|
| Actual/365 | 213 | $65.65 |
| Actual/360 | 213 | $66.56 |
| 30/360 | 209 | $65.31 |
The same loan produces three slightly different amounts, which is why the day-count rule in your agreement matters.
Simple vs. compound interest
Over several periods compound interest always pulls ahead, because interest starts earning interest. Under one rate period the order flips: in example 3, compounding for a fraction of a year gives $65.05, $0.60 less than simple interest, so the difference shows as a negative number. That is expected, not an error.
Simple interest is the right model when interest is paid out or charged without being added to the balance, for example a note that pays interest each year or interest owed for a few days on an overdue amount. For savings that reinvest their earnings, use a compound interest calculator.
Frequently asked questions
What is the simple interest formula?
I = P × r × t: principal times the rate (as a decimal) times the time in the same unit as the rate. The total to repay or receive is P + I.
How do I calculate simple interest for months or days?
Convert the time to the rate's unit. With an annual rate, 18 months is 1.5 years and 90 days is 90 ÷ 365 years. Choose months or days in the calculator and it does the conversion for you.
Is simple interest better than compound interest?
It depends on which side you are on. A borrower pays less with simple interest over several periods; a saver earns more with compound interest. At $10,000, 5% and 3 years the gap is $76.25.
What is the difference between Actual/365 and Actual/360?
Both count the real number of days, but Actual/360 divides by 360, so each day is worth a little more. For 213 days on $2,500 at 4.5%, that is $66.56 instead of $65.65.
Does the rate I enter have to be the APR?
Enter the nominal interest rate stated in your agreement. An APR also reflects certain fees and costs, so it is not the same as the rate used to compute interest.
Why is the compound interest lower than the simple interest?
When the term is shorter than one rate period, compounding a fractional period gives slightly less than the straight-line formula. Above one period, compound interest is always higher.
Sources
This calculator provides estimates for information only and is not financial advice. Your lender's or investment's terms, day-count rule and fees determine the actual interest.