Simple Interest Calculator Online

How to Calculate Simple Interest Online

1. Enter the Principal: Type the starting balance — the amount you borrowed, deposited, or invested. The calculator accepts any currency value; the symbol is cosmetic. For loans, this is the original loan balance; for CDs or short-term notes, the deposit amount.
2. Enter the Annual Interest Rate: Type the rate as a percentage (for example, 5.25 for 5.25%). The calculator converts it to a decimal internally (r = R / 100). Most quoted rates — APR on auto loans, the coupon rate on Treasury bills, the stated rate on a promissory note — are already annual percentages.
3. Enter the Time and Pick a Unit: Type a number and choose Years, Months, or Days. The calculator normalises to a fraction of a year for the formula (months ÷ 12, days ÷ 365). If you need a different day-count convention (Actual/360 for money-market instruments), divide your days by 360 manually before entering, or compute outside.
4. Read the Interest and Total: The output shows the interest accrued (I = P × r × t) and the maturity total (A = P + I = P × (1 + r × t)). Nothing is uploaded — calculations run entirely in your browser session.

Why Use a Simple Interest Calculator?

Simple interest charges or pays interest only on the original principal — no interest-on-interest. The formula is I = P × r × t, and the maturity value is A = P × (1 + r × t). It dominates short-term lending and money-market math, and shows up in more long-term products than most borrowers realise:

• Most US auto loans accrue interest daily on the outstanding principal — interest is calculated by multiplying the outstanding balance by the annual rate and dividing by 365, per Bankrate's explainer. Each payment covers accrued interest first, then reduces principal, so paying early in the month saves interest.
• Treasury bills (T-bills) use the bank-discount yield: discount yield = [(Face − Price) ÷ Face] × (360 ÷ Days to maturity), per TreasuryDirect. T-bills are sold at a discount and pay face value at maturity — pure simple-interest math on an Actual/360 basis.
• Promissory notes, bridge loans, hard-money real estate loans — short-term private debt almost always quotes simple interest. A 12-month note at 10% on $100,000 accrues exactly $10,000 if held to maturity.
• Certificates of deposit (CDs) with interest paid at maturity behave as simple interest; CDs that compound monthly or daily do not (use a compound-interest calculator instead).
• Per diem interest at mortgage closing — lenders charge interest from the closing date to the end of the month using daily simple interest (typically Actual/365 or Actual/360 by lender choice). On a $300,000 loan at 7% with 12 days to month-end, that's roughly $300,000 × 0.07 × 12 ÷ 365 ≈ $690.
• Late fees and judgment interest — many state statutes set post-judgment interest as a simple-interest rate (e.g., the US federal post-judgment rate is simple interest, not compound).

Simple Interest vs Compound Interest

Property	Simple Interest	Compound Interest
Formula	I = P × r × t	A = P × (1 + r/n)^(n·t)
Interest earned on	Principal only	Principal + previously accrued interest
Growth shape	Linear	Exponential
Typical use	Auto loans, T-bills, short-term notes, per diem, judgments	Savings accounts, credit cards, most investments, federal student loans (after capitalisation)
Example: $10,000 @ 6% for 10 years	$6,000 interest; $16,000 total	~$8,194 interest (monthly compounding); ~$18,194 total
Pay early benefit	Significant — interest stops accruing on prepaid principal	Compounding still works in your favour if reinvested
Common in mortgages?	Some lenders calc daily on outstanding balance	Most fixed-rate amortising mortgages compute interest on the unpaid balance each period — functionally equivalent to monthly compounding on the schedule

For mortgages specifically, the industry term "simple interest mortgage" usually means interest accrues daily on the outstanding balance (Actual/365), versus a "standard" amortising mortgage that charges one month's interest at each scheduled payment regardless of when in the month you pay. Both are arithmetically simple-interest in the sense that no interest is charged on accrued interest within a period — what differs is whether daily timing matters.

Day-Count Conventions — Same Rate, Different Math

The "t" in I = P × r × t depends on how you count days in a year. Conventions vary by instrument:

Convention	Year basis	Day count	Where it's used
Actual/365 (Fixed)	365 days	Actual elapsed days	Most US auto loans, sterling money market, many promissory notes
Actual/360	360 days	Actual elapsed days	US money market — commercial paper, T-bills, repos, USD/EUR short-term loans, many commercial real estate loans
30/360 (US)	360 days	Every month treated as 30 days	US corporate bonds, US agency bonds, many municipal bonds — keeps coupon payments uniform
Actual/Actual (ICMA)	Actual days in the period × periods/year	Actual elapsed days	US Treasury notes and bonds (longer than 1 year)

Sources: the Wikipedia day count convention page summarises each, and the Corporate Finance Institute's overview gives worked examples. Actual/360 produces ~1.4% more interest per year than Actual/365 at the same stated rate (365 ÷ 360 = 1.01389), which is why lenders prefer it and borrowers should ask which basis is quoted.

Frequently Asked Questions

Which loans actually use simple interest in practice?

Most US auto loans, personal loans from banks, payday/short-term loans, hard-money real estate loans, bridge loans, and promissory notes use simple interest — interest accrues on the outstanding principal between payments. Mortgages are a grey area: a traditional amortising mortgage charges one period's interest on the unpaid balance each month (no interest-on-interest within a period), while a "daily simple interest mortgage" accrues each day, so paying a few days early saves a few days of interest. Credit cards almost always use compound interest (daily periodic rate compounded), which is why balances spiral.

How does per diem interest at mortgage closing work?

When a mortgage closes mid-month, the lender charges interest from the closing date through the last day of the month — that lump is "per diem" or "prepaid" interest, shown on your Closing Disclosure. The math is straight simple interest: principal × annual rate × days ÷ 365 (or ÷ 360, depending on the lender). On a $400,000 loan at 6.5% closing on the 20th with 11 days to month-end, that's $400,000 × 0.065 × 11 ÷ 365 ≈ $783.56. Closing late in the month minimises per diem; closing early maximises it.

Why does Actual/360 cost more than Actual/365 at the same rate?

A "6% Actual/360" rate divides by 360 to get the daily rate but still charges that rate over the actual 365 (or 366) days of the year. Effective annual rate = 6% × 365 ÷ 360 ≈ 6.083%. Over the life of a 10-year, $1 million commercial loan that gap compounds into thousands of dollars. Commercial real estate and business loans frequently quote Actual/360; consumer products are usually 365.

How do I calculate the yield on a Treasury bill?

T-bills are sold at a discount to face value and the gain at maturity is your interest. The bank-discount yield is rBD = [(Face − Price) ÷ Face] × (360 ÷ Days to maturity). Example from TreasuryDirect: a 26-week bill with $1,000 face bought at $990.50 has discount yield = (9.50 ÷ 1000) × (360 ÷ 182) ≈ 1.879%. The investment yield (closer to the rate you'd actually earn) uses (Face − Price) ÷ Price × 365 ÷ Days ≈ 1.910% — slightly higher because it divides by what you actually paid.

Why does my auto-loan payoff quote change every day?

Because most US auto loans accrue interest daily on the outstanding principal. If your last payment was on the 1st and you request a payoff on the 18th, the lender adds 17 days of per diem interest to the principal balance: balance × rate × 17 ÷ 365. Payoff quotes are typically valid for 10 days; after that you'll need a fresh number. Sending extra principal mid-month immediately reduces the daily interest charge.

Can I use this for compound investments like a 401(k) or savings account?

No — use a compound-interest calculator instead. Simple interest understates growth wherever interest is reinvested or capitalised. $10,000 at 7% for 30 years is $31,000 simple but ~$76,123 compounded monthly. Use simple interest only when the product explicitly says so (T-bills, short-term notes, auto loans), or for closing-day per diem.

What's the difference between APR and simple interest rate?

APR (Annual Percentage Rate) is a disclosure number defined by Regulation Z that bundles the stated rate with finance charges (origination fees, points, mortgage insurance) over the loan term. The simple interest rate in I = P × r × t is just the stated annual rate. On a no-fee loan, APR ≈ stated rate; on a loan with $5,000 in fees, APR can be a half percent or more above the stated rate. Use the stated rate (not APR) when computing per diem or accrued interest in this calculator.

Does the calculator handle leap years?

It treats every year as 365 days, which matches the most common consumer convention (Actual/365 Fixed for auto loans and personal notes). If you need leap-year accuracy or a different basis — Actual/Actual for Treasury notes, Actual/360 for commercial paper, 30/360 for US corporate bonds — enter the time as Days and pre-compute the fraction in your spreadsheet (days ÷ 360 for money market, days ÷ 366 for a leap year on Actual/Actual). For most consumer scenarios the 1-day difference is rounding noise.

Is this calculator free, and is anything uploaded?

Yes, free, no sign-up, no ads gating results. All math runs in your browser — no principal amount, rate, or time value is sent to any server.