Simple Interest Calculator

Use this worksheet when interest is applied only to the original principal, with no compounding. Enter the principal, an annual rate as a percentage, and time in years. The results separate simple interest from the final amount and show the average interest per month over the entered horizon.

Linear interest method

$\text{simple interest}=\text{principal}\times\frac{\text{annual rate}}{100}\times\text{years}$ $\text{final amount}=\text{principal}+\text{simple interest}$

For a positive time, average monthly interest is total simple interest divided by 12×years. At zero years, interest and the monthly average are both zero. Because principal does not change, interest grows in a straight line with time at a fixed rate.

Recomputed example

For $10,000 principal at 5% simple annual interest for 3 years:

• annual interest is 10,000×0.05= $500;
• total interest is 500×3= $1,500.00;
• final amount is 10,000+1,500= $11,500.00;
• average monthly interest is 1,500/(3×12)=$41.666…, displayed as $41.67.

When this method does not fit

Do not use this result for an account or loan that adds interest to the balance and then charges or earns interest on that larger balance. That requires a compounding schedule. The worksheet also does not model payments, deposits, fees, day-count conventions, changing rates, or taxes.

For an entered compounding schedule, use the compound interest calculator.

A common mistake is entering 0.05 for 5%; the annual-rate input expects 5. Another is entering months as years. Convert months to a fraction of a year before using the time input. A negative entered rate produces a negative interest scenario; it should not be interpreted as a promised product outcome.

Check the agreement or account disclosure for whether interest is simple, the applicable annual rate, and the time convention before relying on the estimate.