Simple interest calculator

Keep rate and time in matching units

Interest I = P × r × t, where P is the principal, r is the annual percentage divided by 100 and t is the number of years. Final amount A = P + I. For six months, t = 0.5 when the contract uses that convention.

This model keeps principal unchanged. A repayment loan with a falling balance is a different calculation, even if its lender describes interest as simple. Use a dated balance history for a daily-interest account.

Three years without compounding

Start with 1,000.00 at an illustrative annual 5% for three years. Interest = 1,000 × 0.05 × 3 = 150.00. Final amount = 1,150.00. Each full year contributes 50.00 because the interest is always based on the original 1,000.00.

With annual compounding instead, the same no-contribution example ends at 1,157.63. The extra 7.63 comes from interest on accumulated interest; it is not an additional contribution.

For a controlled comparison using the same starting amount and time, follow simple versus compound interest. The compound-interest calculator answers the different question of growth when credited interest remains invested.

Check the account terms

Confirm whether interest is withdrawn, credited back to the balance, paid only at maturity or recalculated after deposits and withdrawals. The name of an account alone does not establish its accrual method.

The compound-interest distinction is explained by CFPB: how compound interest works. A simple-interest estimate excludes fees, taxes, late charges and changing rates unless those are modeled separately.

A year fraction needs a convention

For a contract using exact days, the divisor might be 365, 360 or another specified basis. A date range crossing a leap year needs the contract's day-count rule. Entering 0.5 years expresses an assumption; it does not verify six particular calendar months of accrued interest.