Simple Interest Calculator
How it works
Interest = Principal × Rate × Time / 100. Every year charges interest on the same original principal, so the interest earned is identical year after year and the total grows in a straight line.
That is the whole difference from compound interest, and it is worth seeing rather than just computing. Simple interest has no memory of what it paid last year — it only ever looks at the original principal. Compound interest adds last year's interest to the balance, so this year's interest is calculated on a slightly bigger number, and the year after that on a bigger number still. For a one-year term there is no "last year" yet, so the two match exactly; for anything longer, compound interest pulls ahead, and it pulls further ahead the longer the money sits. The compound interest calculator runs the same numbers the other way, so you can see the gap directly.
Frequently asked questions
How is this different from the compound interest calculator?
Simple interest is only ever charged on the original principal, so it pays the same amount every single year. Compound interest adds each year’s interest to the balance, so it earns interest of its own from then on. The two give the same answer for a one-year term and pull apart after that — see the compound interest calculator for the same deposit compounded.
My loan or deposit term is in months — what do I enter?
Enter it as a fraction of a year: 18 months is 1.5, 6 months is 0.5. The formula treats time in years throughout.
Does simple interest ever beat compound interest?
Only when the rate is zero, or the term is exactly one year — at both, there is no prior interest for compounding to act on yet, so the two agree exactly. Past a year at any positive rate, compound interest is always ahead, and the gap only widens with time.