Simple Interest Calculator: Formula and Examples
Calculate interest earned only on the original principal.
How the calculation works
Simple interest is linear: earned interest does not itself earn additional interest. This differs from reinvesting interest in a compounded account.
Simple Interest formula
Interest = principal × annual rate ÷ 100 × years. Total = principal + interest.
Worked example
$10,000 at 7% simple annual interest for five years earns $3,500 interest, giving $13,500.
Inputs, assumptions, and interpretation
Amounts and rates apply only to the defined scenario. For projections, returns remain constant and timing follows the selected input. Taxes, market variability, and unentered costs are excluded.
Displayed values are rounded, while calculations use unrounded numbers. The charts show modeled values rather than historical performance. For background, see Investor.gov introduction to investment returns.
Frequently asked questions
Are the default rates guaranteed?
No. Default inputs illustrate how the calculation works. Enter rates and contribution amounts relevant to your scenario, and review the applicable account or scheme terms.
Why might an actual statement differ?
Actual payment dates, compounding conventions, changing returns, fees, tax treatment, and account rules can differ from a simplified projection.
How should I interpret a negative result?
Some comparisons or value changes can be negative, including investment losses or a gap between alternative scenarios. Read the result labels to distinguish a balance from a change in value.