I = 10,000.00 × (5 ÷ 100) × 3
I = 10,000.00 × 0.05 × 3 = 1,500.00
A = P + I = 10,000.00 + 1,500.00 = 11,500.00
t is the time in years (3 years).
How to use the Simple Interest Calculator
- 1Enter the principal, the amount borrowed or invested.
- 2Enter the annual interest rate as a percentage.
- 3Enter the time period and choose Years, Months or Days with the toggle.
- 4Read the simple interest and the total amount, and check the worked formula below them.
What is simple interest?
Simple interest is interest charged or earned only on the original principal. Unlike compound interest, the interest that builds up is not added back to the balance to earn interest of its own, so the amount of interest is the same in every period. That makes simple interest easy to calculate and easy to compare.
It is common for short-term personal loans, some car loans, certificates of deposit that pay out interest instead of reinvesting it, trade credit, and many textbook problems. Most savings accounts and investments use compounding instead, which you can model with our compound interest calculator.
The simple interest formula
The formula is I = P × r × t. P is the principal, r is the annual interest rate written as a decimal (so 5% becomes 0.05), and t is the time in years. The total amount at the end is A = P + I, which can also be written A = P × (1 + r × t).
Because the rate is annual, the time must be in years. This calculator converts for you: months are divided by 12 and days are divided by 365. Some lenders use a 360-day year for day counts, which gives slightly more interest, so check your agreement if you need an exact match.
Worked examples
Suppose you invest 10,000 at 5% simple interest for 3 years. The interest is 10,000 × 0.05 × 3 = 1,500, and the total amount after 3 years is 11,500. The interest is 500 in each of the three years.
For 18 months at the same rate, t = 18 ÷ 12 = 1.5 years, so the interest is 10,000 × 0.05 × 1.5 = 750. For a 90-day period, t = 90 ÷ 365 ≈ 0.2466 years and the interest is about 123.29. Working out the rate itself is a percentage problem, which our percentage calculator can help with.
Simple vs compound interest
Over short periods the difference between simple and compound interest is small, but it grows with time. At 5% for 20 years, 10,000 earns 10,000 in simple interest, while annual compounding would grow the balance to about 26,533, earning roughly 16,533. For savers, compounding is better; for borrowers, a simple interest loan is usually cheaper than one where unpaid interest compounds.
Most installment loans such as mortgages and car loans use a reducing balance, where each payment covers that month's interest and reduces the principal. To see the monthly payment and total interest on that kind of loan, use the loan EMI calculator.
Learn more
Frequently asked questions
How do I calculate simple interest per month?
Divide the annual rate by 12 to get the monthly rate, then multiply by the principal. At 6% a year on 5,000, the monthly interest is 5,000 × 0.06 ÷ 12 = 25. Choosing Months in this calculator handles the conversion automatically.
How many days are in a year for this calculator?
When you choose Days, the calculator uses a 365-day year, so t = days ÷ 365. Some banks use 360 days (often called the banker's rule), which produces slightly higher interest for the same number of days.
Can I find the principal, rate or time instead?
Yes, by rearranging the formula: P = I ÷ (r × t), r = I ÷ (P × t) and t = I ÷ (P × r). For example, if 2,000 earned 300 over 3 years, the rate is 300 ÷ (2,000 × 3) = 0.05, or 5% a year.
Is simple interest better than compound interest?
It depends on which side you are on. Borrowers pay less with simple interest, while savers and investors earn more with compound interest, especially over long periods.
Is my data stored anywhere?
No. The calculation runs entirely in your browser and nothing you type is sent or saved.