Simple Interest Calculator
Calculate simple (non-compounding) interest on a principal over time.
How to use this calculator
- Enter the principal (starting amount).
- Enter the annual rate and the time in years.
- The result shows interest separately from the total.
The formula
I = P × r × t Total = P + I- I
- Interest earned or owed
- P
- Principal
- r
- Annual rate as a decimal
- t
- Time in years
How it works
Simple interest is charged only on the original principal — interest does not earn interest. Growth is linear: the same dollar amount of interest accrues every year.
This makes it easy to compute by hand, but over long periods it grows far more slowly than compound interest.
Worked example
$5,000 at 4% simple interest for 3 years.
- 1I = 5,000 × 0.04 × 3
- 2I = 600
Interest = $600; total = $5,600. (Compounded annually it would be ≈ $5,624.32.)
When this calculator is useful
- Short-term personal loans between individuals
- Some auto and consumer financing quotes
- Bonds that pay interest without reinvesting
- Teaching the difference between simple and compound growth
Frequently asked questions
When is simple interest used in real life?
Some short-term loans, certain auto financing structures, and coupon payments on bonds. Most bank accounts and credit products compound instead.
How do I enter 18 months?
As 1.5 years. Six months is 0.5, one month is about 0.0833.