Simple Interest Calculator
Enter principal amount, annual interest rate and time period to calculate interest earned and total amount. Simple interest does not compound.
Enter principal amount, annual interest rate and time period to calculate interest earned, total amount and daily interest rate for simple (non-compounding) interest.
Initial loan or deposit amount
Per annum rate
Duration of loan or deposit
Formula
Simple Interest = Principal × Annual Rate × Time (in years) / 100 | Total Amount = Principal + Interest
Simple interest is calculated on the principal amount only, without compounding. Each year (or month, or day) earns the same amount of interest. This is common in trade credit, short-term deposits, and late payment penalties where interest does not compound.
Worked Example
Principal $10,000 · Annual rate 5% · Time period 2 years:
Simple interest = $10,000 × 5% × 2 = $1,000
Total amount = $10,000 + $1,000 = $11,000
Daily interest rate = ($10,000 × 5% ÷ 365) = $1.37 per day
With simple interest, you earn exactly $250 per year ($1,000 ÷ 4 years) regardless of compounding frequency. This contrasts with compound interest, where interest earns interest.
Frequently Asked Questions
Use this in your workflow
Use the APR Calculator to convert between annual percentage rate and monthly rates. For compound interest calculations, use the Future Value Calculator. Browse all Free Business Calculators.
Worked example: invoice late payment
A useful starting point before entering your own figures above.
| Input / Output | Value |
|---|---|
| Invoice amount (principal) | $5,000 |
| Late payment interest rate | 1.5% per month (18% per annum) |
| Days late | 30 days |
| Simple interest earned | $75.00 |
| Total amount due | $5,075.00 |
| Daily interest rate | $2.47 per day |
Interpretation: a $5,000 invoice paid 30 days late at 1.5% monthly interest (18% annual) incurs $75 in late fees using simple interest. Each day late costs $2.47 in interest.