Simple Interest Calculator
Calculate simple interest on a loan or deposit from the principal, the yearly rate and the time.
How the simple interest calculator works
Simple interest is charged only on the original amount you borrow or deposit. It does not grow on itself, so it stays the same every year. Enter the principal, the yearly rate and the time in years and months.
The formula
Example: $10,000 at 5% for 3 years earns $1,500.00 in interest, so the total is $11,500.00. That is $500.00 each year.
If interest is added to the balance and earns more interest, that is compound interest, which grows faster. Try the compound interest calculator to compare.
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Frequently asked questions
What is the formula for simple interest?
Interest equals principal times rate times time (I = P x R x T), with the rate as a decimal and time in years.
What is the difference between simple and compound interest?
Simple interest is calculated on the principal only. Compound interest is calculated on the principal plus the interest already earned.
How do I calculate simple interest for months?
Divide the months by 12 to turn them into years, then use the formula. Or use the extra months box.
Which loans use simple interest?
Many auto loans, personal loans and some student loans accrue simple interest on the outstanding balance.
How do I turn a percent into a decimal?
Divide by 100. A 5% rate is 0.05.
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