Simple Interest Calculator

It is interest calculated only on the initial amount (the principal), for the whole period. Unlike compound interest, the gain is not added to the capital.

Interest = principal × rate × time. For example, £10,000 at 5% over 3 years = £10,000 × 0.05 × 3 = £1,500 interest, so £11,500 in total.

On some short-term loans, fixed-coupon bonds and quick estimates. Most UK bank deposits and loans, however, use compound interest.

With simple interest the gain is the same each year. With compound interest, interest is reinvested and grows, so over long periods the result is larger.

Convert the period into years: divide months by 12, days by 365. For example, 6 months = 0.5 years in the formula.

In the UK, savings interest above your Personal Savings Allowance (£1,000 for basic-rate taxpayers, £500 for higher-rate) is taxed by HMRC. The calculator shows gross interest; for the net figure, subtract any tax due.

It is interest expressed as a percentage of the principal per year. At 5% a year, every £100 earns £5 in simple interest over one year.

Yes, it is useful for simple fixed-rate loans. Agree clearly on the principal, rate and period, and the total interest follows directly from the formula.