Simple Interest Calculator

Calculate simple interest on a principal amount with a fixed rate and time period. Quick and straightforward.

Simple Interest Calculator tool

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Example

Input: $5,000 principal at 4% annual interest for 3 years

Result: Simple Interest $600.00, Total Amount $5,600.00

I = P x r x t = 5,000 x 0.04 x 3 = $600, and 5,000 + 600 = $5,600.

Simple vs Compound Interest on $10,000 at 5%

YearsSimple Interest TotalCompounded Yearly TotalDifference
1$10,500.00$10,500.00$0.00
3$11,500.00$11,576.25$76.25
5$12,500.00$12,762.82$262.82
10$15,000.00$16,288.95$1,288.95
20$20,000.00$26,532.98$6,532.98
30$25,000.00$43,219.42$18,219.42

Balance at the end of each period, with no deposits or withdrawals.

  1. Enter the principal amount you are investing or borrowing.
  2. Set the annual interest rate as a percentage.
  3. Specify the time period in years (use decimals such as 0.5 for six months).
  4. View the interest earned and total amount calculated instantly.
  5. Click the copy button to copy any result.

Simple Interest Explained With Examples

Simple interest is paid only on the amount you start with. The formula is interest = principal x rate x time, so $5,000 at 4% for 3 years earns $600. This tool works it out and also shows the interest per month and per day.

Enter the principal (the starting amount), the yearly rate and the time in years. Use decimals for part of a year: 0.5 is six months and 0.25 is three months. You get the total interest, the final amount, and that interest split into months and days. The daily figure uses a 365-day year.

Where does simple interest show up? It is common on short loans between people, some personal and car loans, and short-term deposits such as certain certificates. Many bonds pay a fixed coupon worked out the same way. Because the interest never grows, the cost or earnings are easy to predict.

Over longer periods the gap with compound interest gets large. The table below compares both on $10,000 at 5%. After 1 year they match, but after 30 years compounding pays over $18,000 more. If your account or loan adds interest to the balance, use the Compound Interest Calculator instead. For monthly loan payments, the Loan and EMI Calculator is a better fit.

Formula / How It Works

I = P x R x T, where I = interest, P = principal amount, R = annual interest rate (decimal), T = time in years. Total = P + I.

Frequently Asked Questions

Multiply the principal by the yearly rate (as a decimal) and by the number of years. For $1,000 at 5% for 3 years, that is 1,000 x 0.05 x 3 = $150. Add it to the principal for a total of $1,150. For months, divide the months by 12 first, so 6 months is 0.5 years.
Simple interest is used where interest is not added back to the balance. Examples include some personal and car loans, short-term deposits, and bonds that pay a fixed coupon. Most savings accounts, credit cards and mortgages use compounding or a reducing balance, so check your agreement to see which method applies.
For the same rate and time, yes, because interest is never charged on interest. The difference is small over a year or two and grows over longer terms. Still, compare the total cost of each offer rather than the method alone. Fees and the rate itself often matter more.
Rearrange the formula: rate = interest / (principal x time). If $2,000 earned $240 over 3 years, the rate is 240 / (2,000 x 3) = 0.04, or 4% a year. This tool does not solve for the rate directly, but you can try values until the interest matches.

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