Simple Interest Calculator
Work out simple interest on a capital sum: interest is always calculated on the starting amount and never reinvested. Enter the capital, the annual rate and the term to see the interest and the final value.
Educational estimate, not financial advice. Returns are not guaranteed.
Video: how to use the calculator
What simple interest is
With simple interest, interest is always calculated on the starting capital and is never added to it. Lend €1,000 at 5% for three years and each year produces the same €50: €150 in total. The formula is capital × rate × years.
How it differs from compound interest
With compound interest, the interest is added to the capital and starts earning interest itself, so the base grows each period. Over one year the difference is nil or negligible; over thirty years it is enormous. This calculator shows both results so you can see it with your own numbers.
Where it is actually used
Simple interest appears mainly in short-term arrangements, some loans between individuals, commercial discounting, and certain surcharges and late-payment interest. Most savings and investment products compound, so always check which one applies before comparing two offers.
Worked example
Example: €10,000 at 4% for 5 years under simple interest produces €2,000 of interest and a €12,000 final value. With compound interest and annual compounding, the same inputs give roughly €12,167. The gap is small over five years; over thirty, compounding beats simple interest by more than double.
Frequently asked questions
What is the simple interest formula?
When is simple interest better?
Is late-payment interest simple interest?
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Sources
- Finanzas para Todos: basic interest and saving concepts · Banco de España and CNMV
Author: Thorben Rasmus Idel · Reviewed by: Nahar Geva · Last reviewed: