Simple Interest Calculator

How to use the simple interest calculator

1. In Solve for, choose what you want to find: Interest (I), Principal (P), Annual rate (r) or Time (t).
2. Fill in the other values. When you solve for the principal, the rate or the time, enter the Interest earned or paid instead.
3. In Time entered in, pick Years, Months, Days or Start and end dates, then type the Time or choose the Start date and End date.
4. Choose the Day-count convention: Actual/365, Actual/360 or 30/360. It matters when the time is counted in days.

Results update as you type: Interest, Total amount (P + I), Principal, Annual rate, Time (in years, months and days) and Interest per day. How it was calculated shows the formula with your numbers, and Copy copies a short summary.

The simple interest formula

Simple interest is calculated only on the original principal. Interest is never added to the balance to earn more interest:

I = P × r × t

• P is the principal (the amount lent, borrowed or deposited);
• r is the annual interest rate as a decimal (5% = 0.05);
• t is the time in years.

Rearranging the same equation gives the other three values: P = I ÷ (r × t), r = I ÷ (P × t) and t = I ÷ (P × r). The total amount at the end is A = P + I = P × (1 + r × t).

Example: $10,000 at 5% for 3 years earns 10,000 × 0.05 × 3 = $1,500 of interest, for a total of $11,500. With compound interest at the same rate, the balance would reach about $11,576, because each year’s interest would itself earn interest.

Day-count conventions explained

When time is expressed in days, the rate is annual, so the days must be converted into a fraction of a year. Lenders and markets use different conventions:

• Actual/365: the actual number of days divided by 365. It is the usual convention in Canada and for many consumer loans. 90 days on $10,000 at 5% = 10,000 × 0.05 × 90/365 = $123.29.
• Actual/360: the actual number of days divided by 360, common in money markets. The same 90 days give $125.00, slightly more for the lender.
• 30/360: every month counts as 30 days and the year as 360 days, as used for many bonds. With dates, the tool applies the 30/360 bond basis: a start date on the 31st becomes the 30th, and an end date on the 31st becomes the 30th when the start date is the 30th or 31st. From January 31 to March 31 there are 59 actual days, but 60 days under 30/360.

For Months, the time is simply months ÷ 12. For Years, it is used as entered.

Where simple interest is used

Simple interest applies to short-term loans, some personal loans between individuals, treasury bills, certain guaranteed investment certificates that pay interest out each year, late-payment interest and interest accrued between two coupon dates on bonds. Most savings accounts and mortgages compound instead: for those, use a compound interest calculator. The results are estimates; always check your contract for the exact convention and rounding.