Finance · Interest and investing
Calculate simple interest over a term
Interest is proportional to principal, rate, and time. It does not itself earn interest. Use this only when a contract is actually simple, not as a stand-in for savings compounding.
Calculate
How the calculator works
I = P × (r/100) × t. Total = P + I. There is no compounding frequency. A 4% rate for 10 years on $10,000 is $4,000 of interest, not the ~$4,900 monthly compounding would produce on the other page.
Formula and method
I = P × r × t
r as a decimal (4% → 0.04), t in years. $10,000 × 0.04 × 10 = $4,000.
Linear in time. Day-count conventions (30/360, actual/365) are not applied; t is the decimal year you type. Consumer savings almost always compound; many short-term notes still quote simple interest. This page does not decide which your contract is.
Worked example
$10,000 at 4% for 10 years
P = $10,000, r = 4%, t = 10.
- I = 10,000 × 0.04 × 10 = $4,000.
- Total = $14,000.
$4,000 interest, $14,000 total. Monthly compounding at the same nominal rate would be higher.
Input notes
- Principal
- P in dollars. It stays P for the whole formula; there is no “new principal” each year.
- Annual rate
- Annual percent. 4 means 4% per year simple.
- Time
- t. Six months is 0.5.
Assumptions and limits
Assumptions
- Interest does not compound.
- t is in years as typed, no bank day-count.
Limits
- Not APY, not APR, not a market forecast.
- A “4% APY” savings ad is almost never this formula.
How to read the result
$14,000 is principal plus linear interest. If a product compounds, this page understates the ending amount. Compare with the compound-interest calculator at the same r and t to see the gap.
Common mistakes
Using simple interest for a savings account that compounds monthly.
Switch to compound interest and pick monthly.
Typing 0.04 in the rate field meaning 4%.
Type 4 for four percent. 0.04 would be interpreted as 0.04% per year.
Related calculations
- Compound interestGrow a single principal at a nominal annual rate with a chosen compounding frequency, including continuous compounding. The page also reports the effective annual rate. There are no recurring deposits on this form.
- Amortizing loanGet the constant installment from principal, annual nominal rate, and payment frequency. Origination fees, insurance, and APR stay outside the math.
- CAGRCAGR is the fictional constant annual rate that would take a starting value to an ending value in n years. It smooths the trip: a crash and a rebound disappear into one number.
- Inflation and purchasing powerAn amount, a constant annual rate, a period. Compound forward, or bring a later sum back to today’s purchasing power.
- Savings with monthly depositsProjects a starting balance and constant monthly deposits, credited at month-end, with an annual nominal rate converted as monthly = annual / 12. It is a fixed-rate scenario, not a market forecast.
- ROIROI here is a simple ratio of gain (or loss) to cash put in. It does not know whether the outcome took a month or a decade. CAGR is the tool that uses years.
Frequently asked questions
When is simple interest the right model?
When the contract says interest is not added to principal during the term.
Some short-term notes and classroom problems are simple. Most deposit accounts are not. Read the product, then pick the page.
Can t be a fraction?
Yes. 18 months is 1.5 years.
I scales linearly: 1.5 years at 4% is 1.5 times one year of interest.
Does this include tax?
No.
Interest shown is pretax unless you already reduced r yourself.
Author and update
Written by Rédaction HexaCalc (editorial team). Content last updated: August 25, 2026. No third-party medical or financial review is claimed.
This calculation uses a standard mathematical identity. See also the methodology.
When interest earns interest
Compound interest adds I back into P on a schedule. EAR shows what that schedule is worth once a year.
Open compound interestSimple-interest identity I = P × r × t. This is a calculator, not financial, tax, or credit advice, and not a loan or investment offer. Lenders and brokers apply their own rounding, fees, insurance, and APR. Check the actual contract and disclosures.
Category: Finance