Simple Interest Calculator guide
Simple Interest Calculator: I = P × r × t
Use our simple interest calculator to work out interest on a sum over years, months or days, and compare it with compound interest.
By the AllCalculator editorial teamUpdated 16 October 20261 min read
Simple interest is the most basic way to work out interest: it's only ever paid on the original amount. Our Simple Interest Calculator does the sums.
How to use the calculator (Simple Interest Calculator)
- Enter the principal: the amount saved or borrowed.
- Enter the annual interest rate.
- Enter the time in years, months or days.
The formula
I = P × r × t
- I is the interest
- P is the principal
- r is the annual rate as a decimal (4% = 0.04)
- t is the time in years
For days, t = days ÷ 365.
A worked example
With the calculator's default settings, £5,000 at 4% for 3 years:
- I = 5,000 × 0.04 × 3 = £600
- With compound interest instead, you'd earn £624.32
Simple vs compound interest
| Simple | Compound | |
|---|---|---|
| Interest on | The original amount only | The amount plus earlier interest |
| Growth | Straight line | Speeds up over time |
| Used for | Some short-term loans, bonds' coupons | Most savings and loans |
Frequently asked questions
Do UK savings accounts use simple interest?
Most use compound interest, calculated daily and paid monthly or yearly. Use our Compound Interest Calculator.
Is simple interest better for borrowers?
Yes, all else being equal, because you don't pay interest on interest.
Sources and further reading
Links open official and independent websites in a new tab.
This guide is general information to help you understand your options. It isn't financial, tax, legal or building advice and doesn't take your personal circumstances into account. Figures were checked when the guide was last updated and can change, so confirm anything important with GOV.UK, HMRC, a regulated adviser or a qualified tradesperson.