Interest Calculator

Work out simple interest on a lump sum — enter the principal, the annual rate and the time in years or months to see the interest earned and the total at the end.

How simple interest is calculated

Simple interest applies the annual rate to the original principal only, for as long as the money is saved or borrowed: I = P × r × t, where P is the principal, r is the annual rate as a decimal and t is the time in years. The total at the end is P + I. When you enter the time in months it is divided by 12 first, so 18 months is t = 1.5.

FAQ

What's the difference between simple and compound interest?

Simple interest is worked out on the original principal only, so it is the same amount every year: £5,000 at 4% earns £200 a year, every year. Compound interest adds each period's interest to the balance, so the next period's interest is calculated on a larger amount — £5,000 at 4% compounded annually earns £200 in year one, £208 in year two, and the gap keeps widening over longer periods. Most savings accounts and loans compound, so for those use the compound interest calculator.

How do I enter a period in months, or a part of a year?

Switch the time unit to "Months" and enter the number of months — the calculator divides by 12, so 18 months is treated as 1.5 years and 6 months as 0.5. You can also leave the unit as years and type a decimal such as 2.5.

Does this work for a loan as well as for savings?

The arithmetic is the same: for a loan, "interest earned" is the interest you would pay and "total" is what you would repay, assuming simple interest on the full principal for the whole term with no fees. Most real loans are repaid in monthly instalments with interest charged on the reducing balance, which is what the loan calculator models.