Simple Interest Calculator

Simple interest is principal times the annual rate times years. See the interest and the final amount. No compounding. Results are estimates.

Smart Tips

• Simple interest is calculated only on the principal, not on accumulated interest

• Interest = principal × (annual rate ÷ 100) × years. The rate is not compounded

• This is interest on the original principal for the whole term, not an amortizing loan payment

• Unlike compound interest, simple interest grows linearly over time

• For compound interest over time, use our compound interest calculator instead

• Time can be entered in years or converted from months (e.g. 18 months = 1.5 years)

The Formula

I = P × r × t

I = Interest earned
Total interest amount

P = Principal amount
Initial investment or loan

r = Interest rate
As a decimal (e.g., 0.05 for 5%)

t = Time period
In years

Key Insights

Linear Growth

Simple interest grows in a straight line, making it predictable and easy to calculate compared to compound interest.

No Compounding

Interest is calculated only on the principal amount, not on previously earned interest.

Short-term Friendly

Ideal for short-term investments and loans where compounding effects are minimal.

Transparent

Easy to understand and calculate, making it suitable for loans and short-term savings.

Frequently Asked Questions

Simple interest is calculated only on the principal amount (the original sum borrowed or invested). Unlike compound interest, it doesn't earn interest on previously earned interest.

Use it when interest is charged or credited on the original principal for the whole term, with no compounding. It is not an amortizing loan payment. Car loans and installment loans that pay down principal over time need the loan calculator instead.

Simple interest only calculates interest on the principal, while compound interest calculates interest on both the principal and any previously earned interest, leading to exponential growth.

On the same principal, rate, and years, simple interest is less than compound interest because earlier interest is not added to the balance. An installment loan that pays the balance down over time is a different calculation. Use the loan calculator for that payment.

The time field is years. Six months is 0.5. A fractional year is that fraction of the annual rate. There is no day-count convention such as 365 or 360. A rate of zero or below is rejected.

Interest equals principal × (annual rate ÷ 100) × years, which is the formula in the formula section. The final amount is principal plus that interest. No outside rate feed is used. Source: SEC Investor.gov interest glossary: https://www.investor.gov/introduction-investing/investing-basics/glossary/interest.

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Final Amount

Enter values to calculate

Interest Earned

Principal

Note:Simple interest calculations are based on the principal amount only. Actual interest rates may vary. Always verify interest rates with financial institutions.