Simple interest is a model in which interest is calculated only on the original principal.
Previously earned interest does not become part of the base for future periods.
That is the scope of the current LUKIK Deposit Calculator: simple interest without compounding.
This distinction matters because compound-interest calculations follow a different mathematical model.
What is simple interest?
Let:
P = initial principal;
R = annual interest rate in percent;
T = term in years;
I = interest earned;
A = final amount.
Formula:
I = P × R / 100 × T
Final amount:
A = P + I
For a term entered in months:
T = months / 12
One-year example
Assume:
P = 100,000
R = 12%
T = 1 year
Interest:
I = 100,000 × 12 / 100 × 1
I = 12,000
Final amount:
A = 100,000 + 12,000 = 112,000
Under this mathematical model:
principal = 100,000
interest = 12,000
final amount = 112,000
This example does not include taxes, fees or product-specific conditions.
How the term affects simple interest
For 100,000 at an illustrative 12% annual rate:
| Term | Interest | Final amount |
|---|---|---|
| 6 months | 6,000 | 106,000 |
| 12 months | 12,000 | 112,000 |
| 18 months | 18,000 | 118,000 |
| 24 months | 24,000 | 124,000 |
For six months:
T = 6 / 12 = 0.5
I = 100,000 × 12 / 100 × 0.5 = 6,000
Simple interest grows linearly with time when the principal and rate stay constant.
How the rate affects the result
For a principal of 100,000 and a one-year term:
| Illustrative annual rate | Interest | Final amount |
|---|---|---|
| 8% | 8,000 | 108,000 |
| 12% | 12,000 | 112,000 |
| 16% | 16,000 | 116,000 |
In the simple-interest model, the relationship with the rate is linear as well.
Simple interest vs compounding
With simple interest, the original principal remains unchanged throughout the calculation.
With compound interest, previously earned interest can be added to the base for later periods.
The two LUKIK calculators therefore serve different purposes:
deposit — simple interest without compounding;
compound-interest — compound interest with supported compounding frequencies.
Do not use the simple-interest formula for a scenario where interest is repeatedly capitalized.
Using the LUKIK Deposit Calculator
Enter the initial amount, annual rate and term.
The calculator estimates interest and the final amount under the simple-interest model.
Calculate simple interest → LUKIK Deposit Calculator
Common mistakes
Adding compounding to a simple-interest calculation
The formula:
I = P × R / 100 × T
does not make earned interest part of the new principal.
Treating months as years
For nine months:
T = 9 / 12 = 0.75
not 9.
Treating the mathematical estimate as an exact product payout
Actual financial products may include taxes, fees, different accrual conventions or early-termination conditions.
Mixing simple and compound interest
The same nominal annual rate can produce different results depending on whether interest is capitalized.
When simple interest is useful
The model is useful for estimating non-compounded interest, comparing rates or terms and understanding the direct effect of principal, rate and time.
Conclusion
Simple interest:
I = P × R / 100 × T
Final amount:
A = P + I
For months:
T = months / 12
This model is transparent and appropriate when no compounding is involved.
For capitalized interest, use the separate compound-interest calculation.
Open the LUKIK Deposit Calculator
FAQ
Does this calculator include compounding?
No. The deposit calculator uses simple interest.
How are months handled?
Months are converted into a fraction of a year.
Are taxes included?
Not in the current mathematical model.
Why might a real deposit produce another result?
Because actual product terms may include different accrual rules, taxes, fees or other conditions.