Simple Interest Calculator

Calculating simple interest

The simple interest calculation is one that takes a sum of money (principal) and calculates regular interest on this amount only. This is a direct contrast to compound interest, where interest is calculated and accumulated with each period of time (so that you accumulate interest on interest). It is for this reason that the simple interest calculation is widely regarded as least advantageous to savers and most advantageous to borrowers. Should you wish to include compound interest in your calculations, give the regular savings calculator or personal loan calculator a try.

How to calculate interest and end value

To begin your calculation, enter your starting amount along with the annual interest rate and the start date (assuming it isn't today). Then, select a period of time that the calculation is to run for OR enter an end date. Once you click the 'calculate' button, the simple interest calculator will show you:

• The interest accrued
• Your final value
• The split of final value
• The daily interest rate

Formula for simple interest calculations

The simple interest calculator uses the following formula:

FV = P(1 + rt)

Where:

• FV = Final value (principal + interest)
• P = Principal (starting amount)
• r = Annual interest rate (as decimal)
• t = time period (in years)

Should you wish to work out the total interest only, simply calculate FV - P.

For a detailed explanation of simple interest versus compound interest, and a look at the formulae involved, take a look at this article from Investopedia.