How Simple Interest Works
Simple interest is the most straightforward way to price money over time: SI = P × R × T ÷ 100. The interest is computed on the original principal only — year after year it never compounds, so the growth is a perfectly straight line. Enter time in years, months (÷12) or days (÷365) and this calculator converts it automatically.
Simple interest still runs much of everyday finance: short-term personal and gold loans, many car loans, late-payment penalties on invoices, bond coupons and virtually every exam problem. But most savings products compound — which is why the result panel also shows what the same money would become with yearly compounding, and the table tracks both lines side by side. For full compounding control (monthly, quarterly, daily), use the Compound Interest Calculator; for deposit products see the FD Calculator, and for loan EMIs the EMI Calculator.
Frequently Asked Questions
What is the simple interest formula?
SI = Principal × Rate × Time ÷ 100, with rate as the annual % and time in years (months ÷ 12, days ÷ 365). Total amount = principal + interest. The interest never earns interest.
What is the difference between simple and compound interest?
Simple interest is charged only on the original principal (straight-line growth); compound interest is recalculated on principal + accumulated interest, so it accelerates. At 8% for 10 years on 1,00,000: simple = 80,000 interest, yearly compounding ≈ 1,15,892.
Where is simple interest actually used?
Short-term personal/gold loans, some car loans, invoice late-payment penalties, bond coupon arithmetic and exam problems. Savings products like FDs almost always compound instead.
Can I enter time in months or days?
Yes — pick years, months or days; the calculator divides months by 12 and days by 365 before applying the formula.
Is my financial data uploaded anywhere?
No — every calculation happens in your browser. Nothing is sent, stored or logged.