How to Calculate Simple Interest
Hesaplayıcı3 min read
Short answer
Simple interest is the principal times the annual interest rate times the term in years. Interest applies to the principal only, so every year earns the same interest. The final amount is the principal plus the interest. For example, 100,000 TRY at 40% a year simple interest earns 80,000 TRY in 2 years and grows to 180,000 TRY.
Formula
A = P × (1 + r × t)
interest = P × r × t
- A: final amount
- P: principal
- r: nominal annual interest rate as a decimal (0.40 for 40%)
- t: term in years,
t = years + months/12 + weeks/52 + days/365
A monthly rate is multiplied by 12, a weekly rate by 52 and a daily rate by 365 to get the annual rate.
Step-by-step example
A principal of 100,000 TRY, 40% a year, 2 years:
- Annual rate: r = 40% × 1 = 40%.
- Term: t = 2 + 0/12 + 0/52 + 0/365 = 2 years.
- Final amount: A = 100,000 × (1 + 0.40 × 2) = 180,000 TRY.
- Total interest: 180,000 − 100,000 = 80,000 TRY.
The balance is 140,000 TRY at the end of the first year and 180,000 TRY at the end of the second. Each year adds 40,000 TRY.
Simple interest by term
100,000 TRY at 40% a year:
| Term | t (years) | Interest | Final amount |
|---|---|---|---|
| 1 month | 1/12 | 3,333.33 TRY | 103,333.33 TRY |
| 32 days | 32/365 | 3,506.85 TRY | 103,506.85 TRY |
| 6 months | 0.5 | 20,000.00 TRY | 120,000.00 TRY |
| 1 year | 1 | 40,000.00 TRY | 140,000.00 TRY |
| 2 years | 2 | 80,000.00 TRY | 180,000.00 TRY |
| 5 years | 5 | 200,000.00 TRY | 300,000.00 TRY |
With simple interest the interest is proportional to the term: twice the term gives twice the interest.
Simple interest with a monthly rate
100,000 TRY at 3% a month for 6 months: the nominal annual rate is 3% × 12 = 36%, and the term is 0.5 years. The final amount is 118,000 TRY and the interest 18,000 TRY. Putting the monthly rate into the formula without multiplying by 12 shows one twelfth of the interest.
Simple interest on a time deposit
Turkish banks calculate the interest of a single term on a TRY time deposit with simple interest, counting 365 days a year. The deposit interest calculator also takes off the withholding tax: 100,000 TRY at 40% for 32 days with 17.5% withholding gives 3,506.85 TRY gross interest, 613.70 TRY tax and 2,893.15 TRY net interest. The 17.5% rate is for TRY deposits of up to 6 months opened or renewed from 9 July 2025 (Presidential Decision 10041). If the interest is added to the principal at each renewal, the savings grow with compound interest.
Worked example: 10,000 at 10% a year for 5 years
Final amount
15,000
- Total interest
- 5,000
- Nominal annual rate
- 10.00%
- Effective annual rate
- 10.00%
- Term
- 5 years
Step by step
Nominal annual rate
r = rate × periods per year
r = 10% × 1 = 10.00%
Term
t = years + months/12 + weeks/52 + days/365
t = 5 + 0/12 + 0/52 + 0/365 = 5 years
Final amount
A = P × (1 + r × t)
A = 10,000 × (1 + 10% × 5) = 15,000