Simple Interest Calculator
Compute simple interest with J = C × i × t. Auto-adjusts time unit (days, months, years).
How does simple interest work?
With simple interest, the rate always falls on the initial principal, following I = P × r × t. Unlike compound interest, there is no "interest on interest" here.
The rate period has to match the time you enter, and the conversion happens automatically: 1 year equals 12 months or 360 days, by commercial convention.
The computation runs 100% locally.
Simple interest: formula and meaning
With simple interest, growth is linear: every period earns interest on the original principal alone and never on the interest that has piled up. There are two formulas to know. J = C · i · t gives the interest itself, and M = C · (1 + i · t) gives the future amount. Here C is the principal, i the rate per period, and t the number of periods, always measured in the same time unit as the rate. Take R$ 1,000 at 2% per month over 12 months: the interest works out to 1000 · 0.02 · 12 = R$ 240, leaving a total of R$ 1,240.
Over a long horizon the gap against compound interest gets stark. Put R$ 1,000 to work at 10% per year for 10 years and simple interest leaves you with a final amount of R$ 2,000, while compound interest takes it to R$ 2,594 (1000 · 1.10¹⁰). Stretch the horizon or raise the rate and that distance only widens, which is exactly why nearly every real investment and loan runs on compound interest.
Brazilian context: where simple interest still applies
In Brazil, simple interest hangs on in a handful of niches. You find it in short-term commercial paper, in the late-payment fees on bills (the Consumer Protection Code typically caps these at a 2% fine plus 1% monthly interest), in some payroll-loan contracts, and, through case law, in the court-ordered execution interest applied by many Justice Courts. Most consumer credit (credit card revolving, overdraft, vehicle financing) and savings accounts go the compound route instead. STF's Súmula 121 bars "anatocismo" (charging interest on interest) in certain contracts, which props up the legal corner that simple interest still occupies.
FAQ
Should rate and time use the same period? Yes. A monthly rate needs time counted in months. Mixing the units is far and away the most common mistake people make. You can convert an annual rate to a monthly one with i_month = i_year / 12, but only for simple interest; compound interest uses a different conversion.
Is simple interest ever better than compound for the borrower? Yes, for any horizon longer than a single period. Within one period the two land on the same number; past that point, simple interest always charges less. No wonder creditors lean toward compound.
Can interest be negative? Algebraically, sure. In practice negative rates turn up only in unusual monetary-policy settings, like a few European deposit rates back in the 2010s. The simple-interest formula handles them just as it is, with no change needed.
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Calculate simple interest
Under simple interest, interest always applies to the initial amount, without the accumulating effect of compound interest. It's the model behind many short contracts and a good share of school exercises. This calculator applies the formula J = C × i × t for you.
You enter the principal, the rate and the time, and the tool calculates the interest and the final amount. There's a practical detail that makes a difference: it adjusts the time unit on its own (days, months or years) to match the rate, avoiding the common mistake of mixing a monthly rate with a term in years.
The calculation runs in the browser and stores none of your data. Useful for financial-maths exercises and for checking contracts that use the simple regime.