Simple Interest Calculator
Calculate simple interest and the total from principal, rate and time.
Calculate straightforward interest on a principal amount. Enter the amount, annual rate and number of years to see the interest earned and the total, with no compounding.
Formula / method
Examples
150 interest
500 interest
How simple interest works
Simple interest is charged only on the original principal, never on accumulated interest. The formula is principal times rate times time, so it grows in a straight line rather than a curve. It is common for short-term loans, some bonds and quick estimates.
Simple versus compound
Over a single period the two are identical, but as soon as interest can earn its own interest, compound interest pulls ahead and the gap widens with time. For savings and long-term loans, the Compound Interest Calculator gives the more realistic figure.
Where it's used
- Calculating interest on a short-term personal loan between friends or family
- Working out interest on many auto loans, which use the simple-interest method
- Estimating interest earned on a fixed deposit or bond over a set term
- Computing late-payment or per-day interest on an overdue invoice
- Teaching or checking basic interest without the complexity of compounding
Real-world examples
- A $5,000 loan at 6% simple interest for 3 years accruing $900 in interest
- Interest on a $1,000 deposit at 4% for 6 months coming to $20
- Figuring the per-day interest on an overdue $2,000 invoice at a 12% annual rate
Did you know?
Simple interest is charged only on the original principal and never on interest already earned, so the amount added each period stays flat, unlike compound interest where the balance grows faster and faster.
FAQ
How is this different from compound interest?
Simple interest is calculated only on the original principal. Compound interest also earns interest on previously earned interest, so it grows faster over time.