Formula
SI = P × R × T ÷ 100Amount = P + SI
- P — principal
- R — annual rate in percent
- T — time in years (months ÷ 12, days ÷ 365)
Interest grows in a straight line because it is always charged on the same principal.
Worked example
50,000 at 8% for 3 years
- Principal
- 50,000
- Rate per year
- 8 %
- Time
- 3
- Time in
- Years
Simple interest
12,000.00
Total amount (principal + interest): 62,000.00
Time used in the formula: 3 years
How it works
50,000 at 8% for 3 years earns 50,000 × 8 × 3 ÷ 100 = 12,000, for a total of 62,000. For 6 months the time is 0.5 years, so the interest is 2,000. Days are converted by dividing by 365.
Simple interest never compounds, so it understates what a savings account or a loan that compounds will really do. For interest on interest use the Compound Interest Calculator; for a fixed deposit see FD Calculator; for loans that reduce over time use EMI Calculator.
Assumptions and limits
- Days use a 365-day year.
- Interest is rounded to two decimal places.
A calculation, not financial adviceThis calculator does the arithmetic from the numbers and assumptions you give it. Real financial products add fees, taxes, rate changes and conditions it can’t know. Confirm figures with your lender, bank or a qualified adviser before you decide.
Related tools
Compound Interest CalculatorGrowth of a lump sum with interest on interest, for any compounding frequency.FD CalculatorMaturity amount and interest on a fixed deposit with quarterly, monthly, yearly or simple interest.EMI CalculatorMonthly EMI, total interest and total payable for any reducing-balance loan.RD CalculatorMaturity amount of a recurring deposit with a monthly instalment and compounding.Inflation CalculatorFuture cost of something today, the purchasing power of money later, or the inflation rate between two prices.