Simple Interest Calculator

Our Simple Interest Calculator helps you quickly figure out how much interest you'll earn on savings or pay on a loan. Just enter the principal amount, annual interest rate, and the time period, and we'll do the rest.

Principal Amount

The initial amount of money (e.g., £1000 or $500).

Annual Interest Rate (%)

The yearly interest rate as a percentage (e.g., 2.5 for 2.5%).

Time Period

The duration for which the money is borrowed or invested.

Time Unit

Select whether the time period is in years, months, or days.

How it works

Our Simple Interest Calculator helps you quickly figure out how much interest you'll earn on savings or pay on a loan. Just enter the principal amount, annual interest rate, and the time period, and we'll do the rest.

The Formula

Simple Interest (I) = Principal (P) × Rate (R) × Time (T)
Total Amount (A) = Principal (P) + Simple Interest (I)

Worked Example

Example: Savings Account Interest
Imagine you put £1,000 into a savings account with a 2.5% annual simple interest rate for 3 years. Using the formula: I = £1,000 × 0.025 × 3 = £75. So, you'd earn £75 in interest, and your total amount would be £1,075.

Tips, Assumptions & Limitations

Ensure your interest rate is an annual rate. If it's monthly, multiply by 12 to get the annual rate.
Time should be in years. If you have months or days, convert them to a fraction of a year (e.g., 6 months = 0.5 years).
Simple interest is often used for short-term loans or basic savings accounts, unlike compound interest which is more common for long-term investments.

FAQ

Simple interest is a quick way to calculate the interest charge on a loan or the interest earned on a deposit. It's calculated only on the principal amount, unlike compound interest which also calculates interest on accumulated interest.

The formula for simple interest is I = P × R × T, where I is the interest, P is the principal amount, R is the annual interest rate (as a decimal), and T is the time in years.

Simple interest is commonly used for short-term loans, basic savings accounts, or when calculating interest on bonds. It's straightforward and easy to understand.