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Simple Interest Calculator
Compute linear interest with the standard I = P · r · t formula for loans, bonds, and short-term deposits.
Loan or Investment Terms
$
% per year
Interest Accrual Rates
Interest per Day (365d):
$2.67 / day
Interest per Month:
$81.25 / mo
Interest per Year:
$975.00 / yr
Maturity Summary
Total Amount (Principal + Interest)
$17,925.00
Total Interest: $2,925.00
Simple vs. Compound Comparison
Simple Interest
$2,925.00
Compound (Annual)
$3,119.12
Compound interest would earn $194.12 more over this period.
Principal: 83.7%
Interest: 16.3%
What is Simple Interest and How is it Computed?
Simple interest is a straightforward calculation that determines interest charged or earned exclusively on the principal sum over a specified period. Unlike compounding methods where interest accumulates on top of previously earned interest, simple interest accrues in a constant, linear progression.
Key Capabilities & Features
- Multiple Time Units: Compute interest accurately for durations specified in years, months, or exact days.
- Accrual Breakdown: Isolates interest earned on a daily, monthly, and yearly run-rate.
- Compound Interest Comparison: Side-by-side benchmarking against annual compounding interest.
- Zero Complexities: Transparent implementation of standard algebraic finance principles.
Step-by-Step How It Works
- Enter the initial principal balance (P).
- Enter the agreed annual interest rate percentage (r).
- Choose time units (Years, Months, or Days) and input the loan or investment term.
- View total interest and final maturity value instantly.
Frequently Asked Questions
Daily simple interest divides the annual interest rate by 365 days (or 360 in commercial bank conventions). The daily rate is then multiplied by the principal and the exact number of days elapsed.
Simple interest is advantageous for borrowers because they avoid paying interest on interest. For lenders and investors seeking maximum wealth growth, compound interest yields significantly higher long-term payouts.
Standard residential amortizing mortgages are simple interest loans calculated on the remaining monthly balance, provided on-time monthly payments are made. If payments are missed, unpaid interest can capitalize into compound debt.