Simple Interest Calculator
Simple interest, with the compound equivalent shown next to it. The gap between the two is the entire argument for starting early.
Also called: si calculator, simple interest formula calculator.
$4,000.00 of interest on $10,000 over 5 years, giving a maturity value of $14,000.00. Compound interest at the same rate would give $14,693.28.
An estimate, not an offer or a guarantee. Projected returns assume the rate you entered holds for the whole term, which no market does.
This is what the calculation gives for the numbers you entered. It is an estimate, not advice, and it knows nothing about your situation beyond those numbers. Rules for United States change on a published schedule; the effective date is shown on every rule-based tool.
How this is calculated
Simple interest is charged only on the original principal, so it grows in a straight line. Compound interest is charged on interest already earned, so it curves. Over five years the difference is modest; over twenty-five it is most of the money.
interest = principal * rate * time- P
- Principal (currency)
- r
- Annual rate as a decimal (decimal)
- t
- Time in years (years)
Method and limits
What it assumes
- The return you enter is assumed to hold, unchanged, for the whole period. No market does this.
- Returns are compounded at the stated frequency with no taxes, fees or exit loads deducted.
Formula version 1.0.0 · definition 1.0.0 · United States · Report a problem with this calculator
Frequently asked questions
- Where is simple interest actually used?
- Short-term instruments and many statutory calculations: treasury bills, some fixed deposits paying out rather than reinvesting, and interest awarded on delayed payments and refunds. Anything left to accumulate over years is compound.
- How do I convert a simple interest rate to a compound one?
- You cannot convert the rate; you compare the totals. Simple interest of 10% for three years pays 30% in total, which is a compound rate of 9.14% a year, because (1.3)^(1/3) - 1 = 0.0914.