How to use the simple interest calculator
- Enter the principal — the amount borrowed or deposited.
- Enter the annual interest rate.
- Enter the time and choose whether it is in years, months or days.
- See the interest, the total amount and a year-by-year table.
Simple interest formula
where P is the principal, r the annual rate as a decimal (5% = 0.05), t the time in years, I the interest and A the final amount. For months, divide by 12 (18 months = 1.5 years); for days, divide by 365.
Example
Deposit $10,000 at 5% simple interest for 3 years: I = 10,000 × 0.05 × 3 = $1,500, so the account grows to $11,500. Over 18 months the interest would be 10,000 × 0.05 × 1.5 = $750.
Simple vs. compound interest
Simple interest is paid only on the original principal, so it grows in a straight line. Compound interest is also paid on interest already earned, so it grows faster over time. On $10,000 at 5% for 10 years, simple interest earns $5,000, while yearly compounding earns about $6,289. See the compound interest calculator to compare.
Where simple interest is used
- Car loans and personal loans often charge simple interest on the remaining balance each day.
- Treasury bills, certificates of deposit and some bonds pay simple interest over short terms.
- Short-term business loans and late payment charges.
Solving for other values
- Principal: P = I ÷ (r × t)
- Rate: r = I ÷ (P × t)
- Time: t = I ÷ (P × r)
Frequently asked questions
What is the formula for simple interest?
Simple interest = principal × annual rate × time in years (I = P × r × t). $10,000 at 5% for 3 years earns 10,000 × 0.05 × 3 = $1,500.
How do I calculate simple interest for months?
Convert the months to years by dividing by 12, then use I = P × r × t. For 18 months, t = 1.5.
How do I calculate simple interest for days?
Divide the number of days by 365 (some lenders use 360) to get t in years. $5,000 at 6% for 90 days earns 5,000 × 0.06 × 90/365 = $73.97.
Is simple interest better than compound interest?
For borrowers, simple interest is cheaper because interest is not charged on interest. For savers, compound interest is better because earnings grow faster.
How do I find the total amount with simple interest?
Add the interest to the principal: A = P × (1 + r × t). $10,000 at 5% for 3 years becomes $11,500.
Results are estimates for educational purposes and are not financial advice. Actual loan terms, rates, taxes and fees vary by lender and location — confirm figures with a qualified professional before making decisions.
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