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Simple Interest Calculator

Calculate simple interest earned or paid on a principal amount over a period of time. Simple, straightforward, and easy to understand.

Simple Interest Inputs

Results

Simple Interest
$0
Principal Amount
$0
Total Amount
$0

Breakdown

Balance Accumulation Graph

Accumulation Schedule

Year Interest Balance

Simple Interest Calculator Guide

What is Simple Interest?

Simple interest is a quick and easy method of calculating the interest charge on a loan or investment. It is calculated only on the original principal amount, not on any accumulated interest.

Simple Interest Formula

Simple Interest (I) = P × r × t

Total Amount = P + I = P × (1 + r × t)

Where:

  • P = Principal amount (the initial sum of money)
  • r = Annual interest rate (in decimal form)
  • t = Time the money is invested or borrowed for, in years

When is Simple Interest Used?

  • Short-term loans (car loans, personal loans, etc.)
  • Some savings accounts and certificates of deposit (CDs)
  • Bonds and Treasury bills
  • situations where interest is not compounded

Simple Interest vs Compound Interest

With simple interest, you only earn (or pay) interest on the original principal. With compound interest, you earn interest on both the principal and previously earned interest. Over long periods, compound interest grows much faster.

Example

If you invest $10,000 at 5% simple interest for 3 years:

Interest = $10,000 × 0.05 × 3 = $1,500
Total Amount = $10,000 + $1,500 = $11,500