Simple Interest Calculator
Work out interest that is paid only on the original amount.
Good to know. Simple interest never earns interest on interest. It’s compound interest’s less ambitious sibling.
Not financial advice. Uses only the numbers and rates you enter — no live data.
How it works
In plain words
Multiply the principal by the yearly rate (as a decimal) and by the time in years. Interest is only ever calculated on the original amount.
The formula
I = P × r × t total = P + I
Worked example
5,000 at 4% simple interest for 3 years: 5,000 × 0.04 × 3 = 600.00 of interest, for a total of 5,600.
Sources
- Brealey, Myers and Allen, Principles of Corporate Finance, chapter 2 The standard formulas for loan payments, compounding and present value, the same as a spreadsheet’s PMT and FV.
Sources checked September 29, 2026. 5 automated tests check its answers on every change.
About the simple interest calculator
Simple interest is the most basic kind of interest. You earn (or owe) a fixed percentage of the original amount every year, and that is it. The interest never earns interest of its own.
The formula is often written I = PRT: interest equals principal × rate × time. With 5,000 at 4% for 3 years, you get 200 a year, or 600 in total.
Real-world simple interest is less common than compound interest, but you will see it in some car loans, short-term personal loans, certain bonds that pay out their interest rather than reinvesting it, and in school exercises. It is also a useful quick estimate for short periods, where the difference from compounding is small.
Over longer periods, compound interest pulls ahead, because interest starts earning interest. 5,000 at 4% for 30 years is 11,000 with simple interest but about 16,217 with annual compounding. If your savings account adds interest to the balance, use the compound interest calculator instead.
For periods in days, this calculator uses a 365-day year. Some banks use 360 days (the "banker’s year"), which gives slightly more interest.
Questions people ask
What is the simple interest formula?
I = P × r × t, where P is the principal, r is the yearly rate as a decimal, and t is the time in years.
What is the difference between simple and compound interest?
Simple interest is only paid on the original amount. Compound interest is also paid on interest you have already earned, so it grows faster over time.
How do I calculate simple interest for months?
Divide the number of months by 12 to get years. 18 months is 1.5 years. The calculator does this if you choose months.