Simple Interest
Work out simple interest and the final amount (I = P × r × t).
€
%
yrs
Final amount€11,500.00
Interest€1,500.00
How it works
Simple interest is the most straightforward way to work out the cost of a loan or the return on a deposit: it is charged only on the original amount, with nothing added for interest-on-interest.
The formula is I = P · r · t, where P is the principal, r the annual rate as a decimal and t the time in years. The final amount is P + I. For €2,000 at 4% over 3 years, the interest is 2,000 × 0.04 × 3 = €240, giving €2,240 in total.
It is used for short-term loans, some bonds and many everyday agreements. For longer horizons, compound interest grows faster because it also earns interest on the interest already accrued — so compare the two before committing.
Frequently asked questions
When is simple interest used?
For short-term loans or deposits where accrued interest is not compounded.
How do I convert months to years?
Divide the months by 12. E.g. 6 months = 0.5 years.
Does it differ from compound interest?
Yes — compound interest also earns interest on accumulated interest, so for the same rate and time it yields a larger amount.