How to use it
- Choose simple interest, APR to APY, or APY to APR.
- Enter the principal and rate, or just the rate.
- Set the number of days or how often interest compounds.
- Read the interest or the converted rate.
Three tools in one
- Simple interest: how much interest a principal earns or costs over a number of days, using an actual/365 or actual/360 day count.
- APR to APY: the effective annual rate when a nominal rate compounds daily, monthly, quarterly or semiannually.
- APY to APR: the nominal rate that produces a given effective yield.
Calculations happen in your browser and nothing is stored. The results are estimates for planning and are not financial advice.
Simple interest formula
I = P × r × t
- I = interest
- P = principal
- r = annual rate as a decimal
- t = time in years (days / 365, or days / 360)
Example: $10,000 at 6% for 90 days:
- Actual/365: 10,000 × 0.06 × 90/365 = $147.95
- Actual/360: 10,000 × 0.06 × 90/360 = $150.00
The actual/360 convention, common for some commercial loans and money market instruments, gives slightly more interest for the same stated rate. Simple interest is used for short-term loans, some auto loans that accrue daily, and prorating interest between dates.
APR vs. APY
APR (annual percentage rate) is the yearly rate without compounding. APY (annual percentage yield) includes compounding:
APY = (1 + APR/m)^m − 1
| APR | Compounding | APY |
|---|---|---|
| 6% | Annually | 6.000% |
| 6% | Monthly | 6.168% |
| 6% | Daily | 6.183% |
| 24% | Monthly | 26.824% |
Savings accounts and CDs advertise APY because it makes the yield look as high as it really is. Loans and credit cards advertise APR. For loans, the APR in your federal Truth in Lending disclosure also includes certain fees, so it can differ from a pure rate conversion.
Practical uses
- Compare savings accounts that compound on different schedules by converting both to APY.
- Understand credit card costs: a 24% APR charged monthly is an effective 26.8% a year if the balance is never paid down.
- Prorate interest for a partial month or a short-term personal loan between friends.
- Check a quoted rate: if an APY seems too high for the APR, the compounding frequency explains the gap.
For balances that grow over years, use the compound interest calculator; for loan payments, the loan calculator.
Simple vs. compound interest
Simple interest is charged or paid only on the original principal. Compound interest adds interest to the balance, so later interest is calculated on a larger amount. Over a few days or months the difference is tiny; over years it becomes large. $10,000 at 6% for 10 years earns $6,000 in simple interest, but about $8,194 when compounded monthly.
Many everyday products mix the two: a car loan may accrue simple interest daily on the remaining balance, while a savings account compounds daily or monthly. Check the account agreement or loan disclosure to see which applies. Everything in this tool is calculated in your browser.
A practical rule: if money is borrowed or saved for less than a year, simple interest gives a close enough estimate. For anything longer, use compounding, because the gap grows every year. Credit card balances that carry over month to month are a good example of compounding working against you.
Frequently asked questions
How do I calculate simple interest?
Multiply the principal by the annual rate and by the time in years: I = P × r × t. For days, use t = days / 365.
What is the difference between APR and APY?
APR ignores compounding; APY includes it. With monthly compounding, a 6% APR equals about a 6.17% APY.
Why is actual/360 interest higher?
Dividing days by 360 instead of 365 makes each day count for slightly more of a year, so the same rate yields more interest.
What is continuous compounding?
The limit as compounding becomes infinitely frequent: APY = e^r − 1. At 6% it gives about 6.184%.
Is the APR on my loan the same as this conversion?
Not always. A loan's disclosed APR includes certain fees, so it can be higher than the interest rate alone.
Last updated: November 12, 2026