Simple interest calculator
Interest charged on the initial amount only, in both directions.
Fill in the fields and the result will appear here automatically.
This calculation keeps the initial amount unchanged throughout the term. Earned interest is not added to the interest base. Enter a rate to find interest, or enter a known interest amount to recover the annual rate. A positive fraction of a year is supported. Repayments, extra deposits and the day-count convention of a contract require a different model.
How it works
Formula and logic
With principal P, annual interest rate r in percent and term t, interest I = P × r × t / 100 and the final amount is P + I. The inverse is r = 100 × I / P / t. Zero interest or a zero rate is valid, while P and t must be positive. Calculations retain unrounded values. Ordinary monetary results use whole units, amounts below one unit retain decimals, and very small figures may use scientific notation.
Example
100,000 monetary units at 8% for 3 years earn 24,000 and become 124,000. Recovering the rate from interest of 24,000 gives 8%. At 0% interest is zero and the principal remains 100,000. A separate half-year case, 50,000 at 12%, earns 3,000.
Fields and units
- What to find — list option
- Initial amount — monetary units
- Annual rate, % — unitless
- Interest over the term — monetary units
- Term, years — years
How to use
- — Select interest earned or required rate; the other mode’s amount is inactive.
- — Use a positive principal and a positive term in years. Half a year is 0.5.
- — Enter a nonnegative annual percentage rate or nonnegative known interest. Use one currency for every monetary amount; no exchange conversion takes place.
- — Check whether your agreement keeps the principal unchanged and how it defines a partial year.
Method and limitations
- Calculation method
- Formula and logic
- Data or methodology source
- SEC Investor.gov: original principal and compounding in a CD example CFPB: interest on the outstanding auto-loan balance; US educational explanation
- Limitation
- Educational fixed-principal model. APR, taxes, fees, inflation, contributions and debt repayments are excluded.
FAQ
What must remain fixed in this interest model?
The initial principal remains the interest base for the full term. Interest paid out or retained separately does not earn further interest here. Verify that this assumption matches the product rather than relying on its name.
Can this estimate an amortizing loan’s interest accurately?
Interest on an amortizing loan can depend on its declining outstanding balance. A fixed-principal calculation can exceed that amount; fees and payment timing can change the comparison again. It does not produce a repayment schedule.
Does compound interest always give strictly more?
A single annual capitalization can give the same result. A comparison must specify the rate, capitalization frequency and treatment of partial periods. Equal term labels alone do not make the conventions identical.
How are months or days converted into years?
Supply the fraction required by your task: six months can be 0.5 years. A contract may use actual days and a 360- or 365-day basis. This form has no dates and does not select a day-count convention.
Why is a zero duration outside the form’s domain?
Duration is a divisor in the inverse-rate formula, so both modes require a positive duration. A rate or known interest amount of zero is still allowed for a positive duration.