How Simple Interest Is Calculated
Simple interest applies the annual rate only to the original principal: interest = principal × rate × time. Interest already accrued does not itself earn interest in this model.
Month inputs are converted to twelfths of a year and day inputs use a 365-day year. Actual loan or deposit contracts can use different day-count conventions, payment timing, fees or compounding, none of which are included here.
Simple interest does not earn interest on prior interest. That makes the relationship linear: doubling the time doubles the interest when the principal and rate stay unchanged. The time unit still matters, though. A loan quoted for months or days must be converted consistently into the year convention used by the calculation. For day-based scenarios, this calculator uses a 365-day year so the time basis is explicit rather than hidden.
Frequently Asked Questions
Does this calculator compound interest?
No. It calculates simple interest only. For compounding, use the Compound Interest Calculator.
Can the interest rate be 0%?
Yes. At 0%, interest is zero and the total remains equal to principal.
Why is simple interest linear while compound interest curves upward?
Simple interest is always calculated from the original principal. Compound interest can be calculated from a growing balance that includes earlier interest, so later periods can earn more than earlier ones.
Methodology & Related Tools
Review how RatioCalc builds, tests and updates calculator models before using an estimate for a material decision.
Accuracy review
Investing & Savings family audit: .
Site-wide consistency review: September 4, 2026.