Simple Interest Calculator
Calculate simple interest and the total amount for a principal over time.
Inputs
Total Interest
$1,500.00
Final Amount
$11,500.00
Step by step
Identify the inputs
P = $10,000, r = 5.00%, t = 3 yr
Calculate interest: I = P × r × t
$10,000 × 0.05 × 3
= $1,500.00
Add interest to principal
$10,000 + $1,500.00
= $11,500.00
How it works
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)
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.