Simple Interest Calculator

Finance

Simple Interest Calculator

Last updated: July 11, 2026

Calculate simple interest on a loan or investment. See how much interest you will earn or owe based on the principal, rate, and time period.

Principal Amount ($)

Annual Interest Rate (%)

Time Period

Time Unit

How to Use This Calculator

Enter the Principal Amount (the starting amount of money).
Set the Annual Interest Rate as a percentage.
Enter the Time Period and choose the unit (years, months, or days).
Click Calculate to see the simple interest earned and the total amount.

Formula

I = P × r × t

Where I = simple interest, P = principal amount, r = annual interest rate (decimal), and t = time in years. The total amount is A = P + I.

Examples

Savings Account: $10,000 at 5% for 3 years. Interest = $10,000 × 0.05 × 3 = $1,500. Total amount = $11,500.

Short-Term Loan: $5,000 at 8% for 6 months. Interest = $5,000 × 0.08 × 0.5 = $200. Total amount = $5,200.

180-Day CD: $20,000 at 4.5% for 180 days (0.493 years). Interest = $20,000 × 0.045 × 0.493 = $443.56. Total amount = $20,443.56.

Frequently Asked Questions

What is the difference between simple and compound interest?

Simple interest is calculated only on the original principal. Compound interest is calculated on the principal plus accumulated interest, so compound interest grows faster over time.

What is the simple interest formula?

The formula is I = P × r × t, where I is interest, P is principal, r is annual interest rate (as a decimal), and t is time in years. Total amount = P + I.

When is simple interest used?

Simple interest is commonly used for short-term loans, certificates of deposit (CDs), car loans, and some personal loans. It is easier to calculate and understand than compound interest.

Is simple interest better for borrowers or lenders?

Simple interest is generally better for borrowers because they pay less interest compared to compound interest. For lenders and savers, compound interest results in higher earnings over time.