Simple Interest Calculator
Calculate flat interest on a principal with no compounding.
About Simple Interest Calculator
Simple interest is calculated only on the original principal using I = P × r × t. Unlike compound interest, earned interest does not itself earn further interest.
Formulas
Interest earned
I = P × r × t
- I
- Interest earned
- P
- Principal amount
- r
- Annual interest rate (decimal)
- t
- Time in years
Final amount
A = P + I = P × (1 + r × t)
- A
- Final amount (principal + interest)
Worked example
With the default values below, Simple Interest Calculator returns Total Interest of $1,500.00. Change any input above and every figure here is recalculated in your browser.
Inputs used
- Principalaccepts 0–10,000,000 $
- 10,000 $
- Annual Interest Rateaccepts 0–40 %
- 5 %
- Timeaccepts 0.1–50 years
- 3 years
Results
- Total Interest
- $1,500.00
- Final Amount
- $11,500.00
Step by step
- 1Identify the inputs
- 2Calculate interest: I = P × r × t= $1,500.00
- 3Add interest to principal= $11,500.00
Assumptions and limits
- The result is derived only from the 3 inputs listed above. Anything not among them is not part of the calculation.
- In particular, this calculator does not take inflation, tax or fees or charges into account.
- Figures are rounded for display to 2 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
- For informational purposes only and not financial advice.
- This is an estimate for general information and not professional financial, tax or legal advice. See the full disclaimer for the limits that apply to this kind of calculator.
How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.
Simple Interest Calculator — full guide
Interest that never earns interest
Simple interest is charged on the original principal and nothing else. Whatever interest accrues sits to one side and does not join the balance, so the amount owed grows in a straight line rather than a curve. That makes it the easiest interest to calculate by hand and the easiest to verify on a statement.
You will meet it on short-term and bridging loans, many car loans, promissory notes between individuals, some certificates and bonds, and in the interest clauses of court judgments. Savings accounts and credit cards almost never use it.
The formula and its variables
I = P × r × t
- I is the total interest
- P is the principal — the amount borrowed or deposited
- r is the annual rate as a decimal, so 5% becomes 0.05
- t is time in years
The ending balance follows directly:
A = P + I = P × (1 + r × t)
The only real trap is units. The rate is per year, so t must also be in years. A nine-month term is 0.75, not 9.
Working the defaults
$10,000 principal, 5% annual rate, 3 years.
- Convert the rate: 5 ÷ 100 = 0.05
- Interest for one year: 10,000 × 0.05 = $500
- Multiply by the term: 500 × 3 = $1,500
- Final amount: 10,000 + 1,500 = $11,500
Each of the three years adds exactly $500. Year three earns no more than year one, because the $500 from year one was never added to the principal.
The contrast that matters
Compound the same deposit annually at 5% and three years gives $11,576.25 — only $76.25 more. Over twenty years the picture changes completely:
| Method | Interest over 3 years | Interest over 20 years |
|---|---|---|
| Simple, 5% on $10,000 | $1,500 | $10,000 |
| Compounded annually at 5% | $1,576.25 | $16,532.98 |
Short horizons make the two look alike. Long horizons do not. That gap is the whole argument for checking which basis a contract uses.
Interpreting and misreading the result
- The Final Amount assumes a single lump sum repaid or withdrawn at the end. If you make payments along the way, the principal is falling and this overstates the interest.
- Nothing here is compounded, so do not use it to project savings growth.
- No fees, taxes or inflation are applied. A $1,500 nominal gain is worth less in real terms after three years.
- Rearranging the formula answers related questions: r = I ÷ (P × t) and t = I ÷ (P × r).
For information only, not financial advice.
Related: Compound Interest Calculator, Loan Calculator, Investment Calculator.
For informational purposes only and not financial advice.
Frequently Asked Questions
When is simple interest used?
It's common for short-term loans, some car loans, and certain bonds. Most savings accounts and long-term loans use compound interest instead.
How is this different from compound interest?
Simple interest grows linearly on the principal only, while compound interest grows exponentially because it also earns interest on accumulated interest.
How do I enter a term shorter than a year?
Convert the period to a decimal fraction of a year, because the rate is annual. Six months is 0.5, nine months is 0.75, and 90 days is 90 ÷ 365 = 0.2466. On the default $10,000 at 5%, a 90-day term gives 10,000 × 0.05 × 0.2466 = $123.29 of interest. Some commercial contracts use a 360-day year, which raises the figure slightly.
Can I rearrange this to find the rate I was actually charged?
Yes — divide the interest by the principal times the term: r = I ÷ (P × t). If a three-year note on $10,000 cost $1,500 in interest, then 1,500 ÷ 30,000 = 0.05, a 5% annual rate. The same rearrangement solves for time: t = I ÷ (P × r). This is a quick way to check whether a quoted rate matches the dollars on the paperwork.
Does the Final Amount assume I made no payments during the term?
Yes. Both results assume the principal stays untouched for the full period and everything settles at the end, as with a lump-sum note or a non-compounding deposit. If you repay in instalments, your average outstanding balance is lower than the principal entered, so the real interest is less. Use an amortizing loan calculator for that case.
What happens to the $10,000 example if I stretch it to 20 years?
Interest becomes 10,000 × 0.05 × 20 = $10,000, exactly doubling your money to $20,000. The same deposit compounded annually at 5% would reach $26,532.98. The $6,532.98 difference is interest earning interest, and it is why simple interest is normal for short-term borrowing and rare for long-term saving.