Simple Interest Calculator

Simple interest is charged only on the original principal, not on interest already earned. Enter the principal, the annual rate and the time.

Simple interest

Interest600.00
Total (principal + interest)
5,600.00
Time in years
3

Working

  1. t = 3 years
  2. I = P × r × t = 5,000.00 × 0.04 × 3 = 600.00
  3. Total = 5,000.00 + 600.00 = 5,600.00

Formula

P = principal, r = annual rate as a decimal, t = time in years

I = P × r × t

total amount A = P + I = P × (1 + r × t)

Worked example

5,000 at 4% for 3 years

  1. I = 5,000 × 0.04 × 3 = 600
  2. A = 5,000 + 600 = 5,600

Interest 600; total 5,600.

Converting time to years

  • Months: divide by 12 (6 months = 0.5 years).
  • Days: divide by the day-count basis — 365 (common for consumer products) or 360 (some commercial loans and money-market conventions). 90 days at 5% on 10,000 is 123.29 with a 365-day year and 125.00 with a 360-day year.

Simple vs compound interest

Simple interest grows in a straight line; compound interest grows faster because interest is added to the balance and then earns interest itself. Over one period they are identical; over long periods compound interest pulls far ahead — 10,000 at 5% for 20 years is 20,000 with simple interest but 26,532.98 compounded annually.