๐ฐ Simple Interest Calculator
This calculates simple interest (interest on the principal only), not compound interest.
Enter a principal amount, annual interest rate, and term (years) to calculate interest and the total amount using the simple interest formula (interest = principal ร rate ร time). Use this when you want simple interest rather than compound interest.
How to use
- Enter the principal amount.
- Enter the annual interest rate (%).
- Enter the term (years).
- The interest and total amount are calculated automatically.
How the calculation works
Simple interest is paid only on the original principal. Interest = principal ร annual rate ร years Total = principal + interest With compound interest, interest is added to the principal and earns interest itself in later periods. With simple interest it is not, so the same amount of interest accrues every year and the total grows in a straight line with time. Over short periods the difference between simple and compound interest is small, but it widens as the period gets longer and the rate gets higher.
Worked example
Principal ยฅ100,000 at 5% for 3 years Interest: 100,000 ร 0.05 ร 3 = ยฅ15,000 Total: ยฅ115,000 With annual compounding instead 100,000 ร 1.05ยณ โ ยฅ115,763 (ยฅ763 more than simple interest)
Things to be aware of
- Interest on Japanese bank deposits is taxed at 20.315%. The interest shown here is before tax.
- For periods under a year, enter the years as months รท 12 or days รท 365.
- Simple interest is the better model when interest is paid out rather than reinvested, as with personal loans between individuals or government bond coupons.
FAQ
What's the difference between simple and compound interest?
Simple interest is always calculated on the original principal only. With compound interest, earned interest is added to the principal and itself earns interest, so the total grows larger over longer periods.
What formula is used?
Interest = principal ร rate (%) รท 100 ร term (years) โ the standard simple interest formula.
Can I calculate for months or days instead of years?
Enter the term in years. For a period in months, divide the number of months by 12 (e.g. 6 months = 0.5).