What is a simple interest calculator?
A simple interest calculator computes interest on a fixed principal where the rate applies only to the original amount—not to accumulated interest each period. Short-term loans, some bonds, and basic savings illustrations often use this method.
Enter principal, annual rate, and time in years. The tool shows interest earned and total amount (principal + interest). Actual products may compound interest; compare with the compound interest calculator when that matters.
When is simple interest used?
Simple interest is linear. Each year earns the same rupee amount of interest because the base never grows.
- Estimate interest on short personal or gold loans quoted on flat/simple terms.
- Teach or verify basic interest math before moving to compounding.
- Compare how much less simple interest yields versus compound interest over long tenures.
How does this calculator work?
Interest = Principal × Rate × Time ÷ 100. Total amount = Principal + Interest.
SI = P × R × T / 100
Where –
| P | Principal amount |
|---|---|
| R | Annual rate of interest (%) |
| T | Time in years |
Example: ₹15,000 at 5% for 2 years → SI = ₹1,500, total = ₹16,500
Worked example
Invest or borrow ₹15,000 at 5% per year for 2 years. Simple interest is ₹15,000 × 5 × 2 / 100 = ₹1,500. Total amount is ₹16,500.
The same principal at 5% with annual compounding would earn slightly more because interest would reinvest. Bank FDs typically compound—use the <a href="/calculators/fd-calculator/">FD calculator</a> for that.
How to use this simple interest calculator
Set principal amount, rate of interest (p.a.), and time period in years. Results update as you adjust sliders or type values.
What this calculator does not include
Compounding, TDS on interest, penalty rates, and leap-day day-count conventions are not modeled. Time is expressed in whole years.
Frequently asked questions
What is the difference between simple and compound interest?
Simple interest is charged only on the original principal. Compound interest is calculated on principal plus accumulated interest, so growth accelerates over time.
Do banks use simple interest on FDs?
Most bank fixed deposits compound interest (often quarterly). Simple interest is more common on certain short-term loans or illustrative examples.
Can time be entered in months?
This calculator uses years. For partial years, convert months to a decimal (e.g. 6 months = 0.5 years) or use a tenure that matches your product terms.