The simple interest calculator computes the interest amount and ending balance for savings. Calculate simple interest by using the formula I = Prt. In this formula, “I” equals the interest amount, “P” equals principal (the starting balance), “r” equals the interest rate and “t” equals the number of time periods.
You can use the simple interest calculator below to figure out how much interest you could earn with different rates and time periods.
How to calculate simple interest in a savings account manually
You calculate the simple interest earned in a savings account by multiplying the account balance by the interest rate by the time period the money is in the account. Interest in a savings account is money you earn, not money you pay, so the higher the interest rate, the more you can earn.
Interest = P * r * t
P = Principal amount (the beginning balance).
r = Interest rate (usually per year, expressed as a decimal).
t = Number of time periods (generally one-year time periods).
Simple interest calculation examples
Example 1. Say you have a savings account with $10,000 that earns 4% interest per year. Expressed as a decimal, the interest rate is 0.04, so the formula would be:
Interest = $10,000 * 0.04 * 1. The interest earned in this example equals $400.
Example 2. Now say you want to see how much simple interest you’ll earn in two years. The formula would be:
Interest = $10,000 * 0.04 * 2. The simple interest earned in this example equals $800.
What’s the difference between simple interest and compound interest?
Think of simple interest as a snapshot of your earnings during a set time period. If you want a rough idea of what you’ll earn, you can use the simple interest calculation. But in a savings account, your interest typically starts to earn interest over time as well. This is known as compound interest. If you want to determine precisely how much interest you could earn in savings over time, you’ll want to consider the effect of compounding.
The savings rate your savings account shows you is often actually the compound interest amount, which is expressed as a percentage followed by the words “annual percentage yield” or “APY.”
For example, say you have that same $10,000 in a savings account that earns 4% APY, and you keep the money in the account for two years. If the earnings are compounded monthly, you’ll receive $831.43 in interest, as opposed to the $800 with the simple interest calculation.
» Calculate compound interest with NerdWallet's compound interest calculator
APYs for some of the best savings accounts are around 4% as of April 2026. But other accounts earn much less (the national average savings rate is only 0.38%). To maximize your savings, choose a savings account that earns a high yield. You can then use our compound interest calculator, which considers compound interest, to see how much your savings balance could grow over time.
