Simple Interest Calculator
Calculate simple interest and the final amount from a principal, rate and time period.
How to use the Simple Interest Calculator
- Enter the principal (the starting amount).
- Enter the annual interest rate.
- Enter the time in years.
- See the interest earned and the total amount instantly.
Interest = P × R × T · Total = P + Interest
About the Simple Interest Calculator
Simple interest is interest charged only on the original principal, never on interest already earned. This calculator applies the standard formula — Interest = Principal × Rate ÷ 100 × Time — and adds the result back to your principal to give the total amount. Because nothing compounds, the interest grows in a straight line: double the term and you exactly double the interest.
The distinction matters when you compare offers. A loan quoted at simple interest costs less than the same headline rate compounding, and a savings product paying simple interest falls behind one that compounds. Seeing both figures side by side is usually what settles the question — the compound interest calculator runs the same inputs the other way.
What this does not do: it assumes a single fixed rate held for the whole term and a principal that never changes. It does not model repayments, arrangement fees or early-settlement rebates, and it takes no view on tax on interest earned — those rules vary by country and change over time. For a loan repaid in fixed monthly instalments, the loan calculator is the right tool.
Frequently asked questions
How is simple interest different from compound interest?
Simple interest is always calculated on the original principal only, so it grows in a straight line. Compound interest is calculated on the principal plus interest already added, so it accelerates. Over a short term the two are close; over decades the gap is enormous.
What rate should I enter?
The annual rate as a plain percentage — type 5 for 5% per year. If your rate is quoted monthly, multiply it by 12 first, or enter the term in months divided by 12.
Can I use a term shorter than one year?
Yes. Enter a fraction of a year — 0.5 for six months, 0.25 for three. The formula is linear, so fractional terms work cleanly. Note that some lenders use day-count conventions (such as 365 or 360 days) that produce slightly different figures from a plain fraction.
Where is simple interest actually used?
It shows up in some short-term and personal loans, certain instalment credit agreements, and bonds where coupons are paid out rather than reinvested. Many products advertise a rate without saying how it is applied, so check the APR rather than the headline number.
Does it work in any currency?
Yes. The maths is currency-agnostic — the result comes back in whatever currency you entered. The tool labels amounts with a $ sign, but nothing in the calculation depends on that.
Guides & articles about this tool
Simple Interest Formula Explained with Examples
The simple interest formula is I = P x r x t, where t is in years. Here’s how it works, what it’s for, and where people usually go wrong.