Personal finance
Simple interest calculator
Enter three out of four values: the field you leave blank is calculated automatically.
When to use the simple interest calculation
With simple interest, interest always accrues on the initial capital alone: what has already been earned is never added to the principal, so it never earns interest itself. The final amount grows linearly rather than exponentially, which makes this the natural convention for short operations.
It is the regime used by convention in most sub-annual transactions: overdrafts, discounting of commercial paper, late-payment interest, coupons that are not reinvested, private loans repaid in a single instalment. Beyond one year compound interest takes over, because periodic capitalisation becomes the dominant effect.
Numeric example: €10,000 invested for 10 periods at 3% per period produces a final amount of 10,000 × (1 + 0.03 × 10) = €13,000, i.e. €3,000 in interest. With compound interest, at the same rate and duration, the final amount would have been €13,439.16: the €439.16 gap is exactly what is lost by not capitalising the interim interest.
The calculator solves the formula for any of its unknowns. Leaving the rate field blank gives you the implied return of an operation whose capital, final amount and duration you already know — useful when comparing two offers quoted in different terms.
Common mistakes
- Using an annual rate with periods counted in months: rate and period must share the same unit, otherwise the result is wrong by a factor of twelve. Convert the rate first with the equivalent simple rate calculator if needed.
- Applying simple interest to multi-year operations: beyond one year, the absence of capitalisation systematically understates the final amount and no longer reflects real contract terms.
- Confusing the final amount with the interest: the final amount M already includes the capital returned, while interest is the difference M − C.
Frequently asked questions
What is the simple interest formula?
The final amount is M = C × (1 + i × t), where C is the initial capital, i the interest rate per period as a decimal and t the number of periods. Interest is I = C × i × t.
When should I use simple rather than compound interest?
Simple interest is the usual convention for operations shorter than a year or repaid in a single instalment. Over multi-year horizons the correct regime is compound interest, which accounts for periodic capitalisation.
Can I calculate the rate or the duration instead of the final amount?
Yes: the calculator automatically solves for whichever field you leave blank — capital, rate, number of periods or final amount — using the other three values.
Should the rate be annual?
The rate must refer to the same period you use to count the duration. If the periods are months, you need the monthly rate; if they are years, the annual one. Use the equivalent simple interest rate calculator to switch between units.
How this calculation works
M = C × (1 + i × t) and I = M − C = C × i × t. Inverting the formula gives C = M / (1 + i × t), i = (M / C − 1) / t and t = (M / C − 1) / i. The rate i must be expressed as a decimal (3% → 0.03) and refer to the same period as t.
Related calculators
Compound interest
Solve for capital, rate, periods or final amount using the compound interest formula.
Equivalent simple rate
Convert a simple rate between monthly, quarterly, four-monthly and annual periods.
Equivalent compound rate
Convert a compound rate between frequencies with the exponential formula.
Current account interest
Daily-balance interest on a current account: credit and debit products, tax and closing balance.