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Simple Interest Calculator

Interest = Principal × Rate × Time

Principal Amount

Annual Interest Rate

Time Period

Interest Earned

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Total Value

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Total Return

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Principal vs Interest

PrincipalInterest

Year	Interest This Year	Total Interest	Total Value

How simple interest works

Simple interest is calculated only on the original principal — the amount you deposited or borrowed at the start. Unlike compound interest, the interest you earn does not itself earn further interest.

Interest = Principal × (Rate / 100) × Time
Total Value = Principal + Interest

Example: You deposit £10,000 at 5% per year for 5 years.
Interest = £10,000 × 0.05 × 5 = £2,500
Total = £10,000 + £2,500 = £12,500

Simple interest grows in a straight line — each year earns exactly the same amount of interest. This makes it predictable and easy to plan around.

When is simple interest used?

Simple interest is most common for short-term financial products where the interest period is brief and adding compounding would be unnecessarily complex. Typical uses include:

Personal loans: Many short-term personal loans and car finance products use simple interest. You know exactly how much interest you owe from day one.

Some savings bonds: Fixed-rate bonds that pay out interest at the end of the term rather than reinvesting it effectively use simple interest mechanics.

Bridging loans: Short-term property finance is often quoted on a monthly simple interest basis.

If you're comparing savings accounts over a longer period, check our Compound Interest Calculator — you'll almost certainly earn more with compounding.

💡Did You Know?

Simple vs Compound

Simple interest grows in a straight line. Compound interest grows like a snowball — slowly at first, then faster and faster.

Simple→Same £ every year

Compound→More £ every year

Other Calculators

📈Compound Interest→ 🏦Savings Growth→ 🏠Loan Interest→

Simple Interest — FAQ

For saving, compound interest is almost always better. Simple interest earns the same fixed amount each year; compound interest earns more each year because your interest starts earning its own interest. The longer the period, the bigger the difference.

For simple interest, divide the annual rate by 12. So 6% per year = 0.5% per month. Enter the monthly rate and set the time in months (entering fractional years also works — e.g., 0.5 for 6 months).

The stated interest rate is the nominal rate before compounding effects. AER (Annual Equivalent Rate) normalises different compounding frequencies into a single comparable annual figure. For simple interest products with no compounding, the stated rate and AER are the same.

Yes — enter the time as a decimal fraction of a year. For example, 3 months = 0.25 years, 6 months = 0.5, 30 days ≈ 0.082. Make sure your rate is an annual rate and the result will be accurate.