# Simple Interest Calculator

📲 Reviewed by Chris Hindle.
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Time period or end date?
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## Simple interest projection

Final balance
\$5,750.00 Interest accrued
\$750.00 How your interest was calculated
1. FV = principal × ( 1 + rate × years )
2. FV = 5000 × (1 + (0.05 × 3))
3. FV = 5000 × 1.15 = 5750
4. Interest = 5750 - 5000 = 750
Initial balance
\$5,000.00 Monthly interest
\$20.83 End date
Oct 2026

### Projection breakdown

Oct 2023\$5,000.00------\$5,000.00
Nov 2023\$0.00\$20.83\$5,000.00\$20.83\$5,020.83
Dec 2023\$0.00\$20.83\$5,000.00\$41.67\$5,041.67
2023 total\$0.00\$41.67\$5,000.00\$41.67\$5,041.67
Jan 2024\$0.00\$20.83\$5,000.00\$62.50\$5,062.50
Feb 2024\$0.00\$20.83\$5,000.00\$83.33\$5,083.33
Mar 2024\$0.00\$20.83\$5,000.00\$104.17\$5,104.17
Apr 2024\$0.00\$20.83\$5,000.00\$125.00\$5,125.00
May 2024\$0.00\$20.83\$5,000.00\$145.83\$5,145.83
Jun 2024\$0.00\$20.83\$5,000.00\$166.67\$5,166.67
Jul 2024\$0.00\$20.83\$5,000.00\$187.50\$5,187.50
Aug 2024\$0.00\$20.83\$5,000.00\$208.33\$5,208.33
Sep 2024\$0.00\$20.83\$5,000.00\$229.17\$5,229.17
Oct 2024\$0.00\$20.83\$5,000.00\$250.00\$5,250.00
Nov 2024\$0.00\$20.83\$5,000.00\$270.83\$5,270.83
Dec 2024\$0.00\$20.83\$5,000.00\$291.67\$5,291.67
2024 total\$0.00\$250.00\$5,000.00\$291.67\$5,291.67
Jan 2025\$0.00\$20.83\$5,000.00\$312.50\$5,312.50
Feb 2025\$0.00\$20.83\$5,000.00\$333.33\$5,333.33
Mar 2025\$0.00\$20.83\$5,000.00\$354.17\$5,354.17
Apr 2025\$0.00\$20.83\$5,000.00\$375.00\$5,375.00
May 2025\$0.00\$20.83\$5,000.00\$395.83\$5,395.83
Jun 2025\$0.00\$20.83\$5,000.00\$416.67\$5,416.67
Jul 2025\$0.00\$20.83\$5,000.00\$437.50\$5,437.50
Aug 2025\$0.00\$20.83\$5,000.00\$458.33\$5,458.33
Sep 2025\$0.00\$20.83\$5,000.00\$479.17\$5,479.17
Oct 2025\$0.00\$20.83\$5,000.00\$500.00\$5,500.00
Nov 2025\$0.00\$20.83\$5,000.00\$520.83\$5,520.83
Dec 2025\$0.00\$20.83\$5,000.00\$541.67\$5,541.67
2025 total\$0.00\$250.00\$5,000.00\$541.67\$5,541.67
Jan 2026\$0.00\$20.83\$5,000.00\$562.50\$5,562.50
Feb 2026\$0.00\$20.83\$5,000.00\$583.33\$5,583.33
Mar 2026\$0.00\$20.83\$5,000.00\$604.17\$5,604.17
Apr 2026\$0.00\$20.83\$5,000.00\$625.00\$5,625.00
May 2026\$0.00\$20.83\$5,000.00\$645.83\$5,645.83
Jun 2026\$0.00\$20.83\$5,000.00\$666.67\$5,666.67
Jul 2026\$0.00\$20.83\$5,000.00\$687.50\$5,687.50
Aug 2026\$0.00\$20.83\$5,000.00\$708.33\$5,708.33
Sep 2026\$0.00\$20.83\$5,000.00\$729.17\$5,729.17
Oct 2026\$0.00\$20.83\$5,000.00\$750.00\$5,750.00
Oct 2023\$5,000.00------\$5,000.00
2023\$0.00\$41.67\$5,000.00\$41.67\$5,041.67
2024\$0.00\$250.00\$5,000.00\$291.67\$5,291.67
2025\$0.00\$250.00\$5,000.00\$541.67\$5,541.67
2026\$0.00\$208.33\$5,000.00\$750.00\$5,750.00

Disclaimer: Whilst every effort has been made in building our calculator tools, we are not to be held liable for any damages or monetary losses arising out of or in connection with their use. Full disclaimer.

You can use our simple interest calculator to calculate the simple interest on your savings or loan without compounding. That is to say that interest is only calculated on the principal, not on previously accumulated interest.

Continue reading to learn how to calculate simple interest, discover what the formula looks like and get tips on how to use our calculator.

## How to calculate interest

To calculate simple interest on a lump sum, multiply your lump sum figure by the interest rate per period (as a decimal) and then again by the number of periods you wish to calculate for. The formula for this is P × r × t.

To give an example, if you wish to calculate simple interest on a \$5,000 loan at a 3% annual interest rate for 2 years, your calculation would be:

5000 × 0.03 × 2 = \$300

Likewise, if you borrow \$500 from a friend at 3% per month for 6 months, your simple interest calculation would be:

500 × 0.03 × 6 = \$90

Note that the interest rate (r) and time period (t) are in the same time units (years for the first calculation and months for the second). This is important for these interest calculations to work.

These simple interest calculations assume that interest is not compounded. Savings accounts earn compound interest, meaning that interest is calculated on the already accumulated interest over time. So, if you're looking to work out compound interest, you should use our compound interest calculator instead.

## Simple interest formula (principal + interest)

If you wish to calculate a figure for interest AND principal, the formula for this is A = P(1 + rt), where P is the initial principal, r is the interest rate and t is the time period.

A = P(1 + rt)

Where:

• A = the future value
• P = the initial principal
• r = annual interest rate (decimal)
• t = the time in years

### Example calculation

Let's say that we want to lend a friend \$5,000 at a yearly interest rate of 5% over 4 years. Your calculation might look like this:

Our formula: A = P(1 + rt)

• P = 5000.
• r = 5/100 = 0.05 (decimal).
• t = 4.

Plugging those figures into our simple interest formula, we get:

A = 5000 × (1 + (0.05 × 4)) = 6000

Your friend will owe you back \$6,000 in 4 years time. Of that, the interest will be \$1,000, which works out at \$250 per year. The table below shows how the interest would accrue over each of the four years.

Year Principal Total Interest Total
1 \$5,000 \$250 \$5,250
2 \$5,000 \$500 \$5,500
3 \$5,000 \$750 \$5,750
4 \$5,000 \$1,000 \$6,000

## Variations of the simple interest formula

Here are some other useful variations of the simple interest formula, which allows you to calculate principal, rate of interest and timeframe.

Calculation Formula
Calculate principal+interest (A) A = P(1 + rt)
Calculate interest only (I) I = P × r × t
Calculate principal (P) based upon future value P = A / (1 + rt)
Calculate interest rate as a percentage (R) R = (1/t)(A/P - 1) × 100
Calculate time factor (how long it takes to reach a target figure) (t) t = (1/r)(A/P - 1)

Where:

• A = future value of the investment/loan
• I = total interest
• P = principal amount
• r = interest rate (decimal)
• R = interest rate (percentage)
• t = time periods

## What is simple interest?

Simple interest is a form of interest commonly used for transactions such as auto loans, student loans or personal loans.

A simple interest calculation takes a sum of money (principal) and calculates regular interest only on that original amount, without the effect of compounding. This is in direct contrast to compound interest, where accumulated interest is added back to the principal for each calculation, so that you effectively earn interest on already accumulated interest.

It is this difference that makes the simple interest calculation widely regarded as least advantageous to savers and most advantageous to borrowers. 1

## How to use our simple interest calculator

To use our simple interest calculator, enter your starting balance, along with the annual interest rate and the start date (assuming it isn't today). Then, enter either a number of years, months or days that you wish to calculate for or an end date. You can also include any regular additional deposits and withdrawals (additions and deductions). Once you click the 'calculate' button, the simple interest calculator will show you:

• The total interest earned
• The final value (principal plus accrued interest)
• A monthly breakdown of interest earned

## To conclude

I hope this calculator and article has helped you with calculating the interest on your savings or loan. If you have any questions or suggestions for improvements, please do drop me a line.

Updated: July 26, 2023

### References

1. What is the Difference Between Simple & Compound Interest?, The Motley Fool.