Simple Interest Calculator

The formula

Simple interest is calculated only on the original amount, never on interest already earned:

Interest = principal × annual rate × time (years)

With the rate entered as a percentage, the calculator computes P × r × t ÷ 100.

Worked example

€5,000 invested at 4% a year for 3 years:

• Interest per year: 5,000 × 4% = €200
• Over 3 years: 200 × 3 = €600, for a final balance of €5,600.

The interest is the same every year, so the balance grows in a straight line.

Simple vs compound interest

With compound interest, each year's interest is added to the balance and earns interest itself. The difference is small at first and large over time:

For the €5,000 example above, compounding would give €624 instead of €600 after three years.

Where simple interest is used

• Short-term loans and invoices: late-payment interest is usually computed on a pro-rata basis.
• Bonds: coupons are paid on the face value and not reinvested automatically.
• Savings accounts within a year: many accounts calculate interest on balances day by day (or fortnight by fortnight) and only add it to the balance once a year.

Interest for a number of days

For periods shorter than a year, use the fraction of a year: I = P × r × days ÷ 365. €5,000 at 4% for 90 days earns 5,000 × 0.04 × 90 ÷ 365 = €49.32. Some banks and money markets use a 360-day year instead, which gives slightly more interest. You can enter a decimal number of years in the calculator (90 days ≈ 0.2466 years).

Formulas and content last reviewed: October 2026 · About