Simple Interest Calculator
Quick simple-interest calculation on any principal, rate and time period.
TL;DR — Simple Interest Calculator: A simple interest calculator computes interest that accrues only on the original principal — no compounding. Simple interest is commonly used for short-term loans, basic savings instruments and informal lending. The interest earned is the same in every period.
What is the Simple Interest Calculator?
A simple interest calculator computes interest that accrues only on the original principal — no compounding. Simple interest is commonly used for short-term loans, basic savings instruments and informal lending. The interest earned is the same in every period.
How to use the Simple Interest Calculator
- Enter the principal amount.
- Enter the annual interest rate as a percentage.
- Enter the time period in years (decimals allowed, e.g. 2.5).
- Read the simple interest earned and the final amount (principal + interest).
Formula
SI = P × R × T ÷ 100 A = P + SI
SI = simple interest · P = principal · R = annual interest rate (%) · T = time in years · A = final amount
Worked example
$5,000 at 6% per year for 4 years. SI = 5,000 × 6 × 4 ÷ 100 = $1,200. Final amount = $5,000 + $1,200 = $6,200.
Frequently asked questions
What is simple interest?
Simple interest is interest calculated only on the original principal for a defined period. It does not compound — the interest amount is the same in every period.
When is simple interest used?
Short-term personal loans, treasury bills, some bonds and informal lending typically use simple interest. Most long-term savings and investments use compound interest instead.
How do I convert months to years for the formula?
Divide months by 12. For example, 18 months is 1.5 years.
Is simple interest better for borrowers or savers?
Simple interest is better for borrowers (you pay less than under compounding) and worse for savers (you earn less than under compounding) over long periods.
Can the rate be entered monthly?
Use the annual rate. If you only know the monthly rate, multiply by 12 to get the annual figure.