➗ Simple Interest Calculator
Calculate simple interest and the total amount owed or earned using I = P × r × t, with the time in years, months or days.
Quick answer: Simple interest = principal × rate × time. $10,000 at 5% a year for 3 years earns $1,500.00 in interest, for a total of $11,500.00.
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Simple Interest Calculator inputs
Result
Simple interest
$1,500.00
on $10,000.00 at 5% for 3 years
| Principal | $10,000.00 |
| Interest | $1,500.00 |
| Total amount (A = P + I) | $11,500.00 |
- Interest per year
- $500.00
- Interest per month
- $41.67
- Interest per day
- $1.37
Year-by-year balance
| Year | Interest to date | Balance |
|---|---|---|
| 1 | $500.00 | $10,500.00 |
| 2 | $1,000.00 | $11,000.00 |
| 3 | $1,500.00 | $11,500.00 |
The simple interest formula
Simple interest is earned or charged only on the original amount – the principal. It grows in a straight line: every year adds exactly the same amount of interest.
I = P × r × t · A = P + I = P × (1 + r × t)
P is the principal, r the annual rate as a decimal (5% = 0.05), and t the time in years. For months use t = months ÷ 12; for days use t = days ÷ 365.
Worked example
You lend $10,000 at 5% simple interest for 3 years. Interest = 10,000 × 0.05 × 3 = $1,500, and you get back $11,500 in total. That is $500 every year, about $41.67 a month.
Simple vs. compound interest on $10,000 at 5%
| Years | Simple interest | Compounded yearly |
|---|---|---|
| 1 | $500 | $500 |
| 5 | $2,500 | $2,762.82 |
| 10 | $5,000 | $6,288.95 |
| 20 | $10,000 | $16,532.98 |
Solving for other values
- Rate: r = I ÷ (P × t)
- Time: t = I ÷ (P × r)
- Principal: P = I ÷ (r × t)
Tips
- Some lenders use a 360-day year for day counts, which makes the interest slightly higher than a 365-day calculation.
- When comparing a simple-interest offer with a compound one, compare the total amount repaid, not just the rate.
Simple interest on loans
On a simple-interest loan, interest accrues daily on the outstanding principal. Paying early or making extra payments reduces the principal sooner, so less interest builds up – one reason simple-interest car loans reward borrowers who pay ahead of schedule.
Estimates for educational purposes, not financial advice.
Frequently asked questions
What is the simple interest formula?
I = P × r × t, where P is the principal, r the annual rate as a decimal and t the time in years. The total amount is A = P + I = P(1 + rt).
How do I calculate simple interest for months or days?
Convert the time to years first: divide months by 12 or days by 365. For example, 90 days at 6% on $5,000 is 5,000 × 0.06 × 90/365 = $73.97.
What is the difference between simple and compound interest?
Simple interest is only ever charged on the original principal. Compound interest is also charged on interest already added, so it grows faster over long periods.
Where is simple interest used?
Many car loans, short-term personal loans, some bonds and certificates, and inter-bank lending use simple interest. Most savings accounts and credit cards compound.