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Simple Interest Calculator

See how interest grows without compounding

Calculate the final amount with simple interest, view the linear gain per period, and understand when this model works best.

Recreational/Educational

  • Educational tool; not financial advice. Results are estimates.

Quickly estimate how much a principal will earn or what you will owe in a contract with simple interest. The calculator displays the final amount and the total interest accrued with linear growth.

How it works

With simple interest, returns always apply to the original principal. The interest value for each period is constant and is not added back to the principal for the next calculation. Growth is therefore linear, unlike compound interest.

Formula

A = P (1 + i · n)

Variables

  • A — final amount
  • P — initial principal
  • i — interest rate per period (% per month/year)
  • n — number of periods (months/years)

Notes

  • The rate must match the time unit of the informed period.
  • Simple interest does not accumulate past earnings; values grow in an arithmetic progression.
  • Rounding and additional fees may change the final result.

Examples

  • $1,200 at 2% per month for 6 months

    principal: $1,200
    rate: 2% per month
    periods: 6

    Monthly interest: 1,200 × 0.02 = $24. Over 6 months the total interest is 24 × 6 = $144. The final amount is 1,200 + 144 = $1,344.

    ≈ $1,344.00 (interest ≈ $144.00)

  • $5,000 at 10% per year for 3 years

    principal: $5,000
    rate: 10% per year
    periods: 3

    Annual interest: 5,000 × 0.10 = $500. In 3 years the interest totals $1,500. Final amount: 5,000 + 1,500 = $6,500.

    ≈ $6,500.00 (interest ≈ $1,500.00)

  • Installment plan with simple interest

    principal: $800
    rate: 1.5% per month
    periods: 10

    Interest per installment: 800 × 0.015 = $12. Over 10 months the total interest is $120, resulting in a final amount of $920.

    ≈ $920.00 (interest ≈ $120.00)

    • Check whether the contract uses simple or compound interest before comparing offers.

Comparisons

Simple vs. compound interest

Simple interest pays the same amount each period because the rate applies only to the initial principal. With compound interest, each period’s interest is added to the amount and increases future returns.

Best practices

Use simple interest to estimate short-term charges, late-payment penalties, or agreements where regulations require linear capitalization (such as some insurance policies or specific credit operations). For long-term investments, compare with compound capitalization to understand the actual gain.

Limitations

  • Does not consider taxes, bank fees, or inflation adjustments.
  • Variable or tiered rates are not covered.
  • Incorrect inputs can lead to inaccurate results.

Privacy

Calculations run locally in your browser; no data is sent to or stored on our servers.

FAQ

  • When should I use simple interest?

    For short-term transactions, penalties, commercial discounts, or contracts where regulations require linear capitalization.

  • How do I convert an annual rate to a monthly rate with simple interest?

    Just divide the annual rate by 12 (e.g., 12% per year ≈ 1% per month) because there is no compounding.

  • Why does my result differ from the financial institution’s?

    Institutions may add fees, insurance, taxes, or apply compound capitalization even when advertising a nominal simple rate.

References

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