Simple interest calculator
Calculate simple interest, or solve for the principal, rate or time, with the worked formula and a side-by-side comparison against compounding.
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- Nothing you enter is sent
- Free, no account
Principal
$10,000.00
Interest
$1,500.00
Final balance
$11,500.00
principal + interest
If it compounded annually
$11,576.25
$76.25 more
- Principal87.0%$10,000.00
- Interest13.0%$1,500.00
Simple interest keeps the two parts strictly separate.
- Simple interest$11,500
- Compounded annually$11,576
Formula and working
Simple interest
I = P × r × t I = 10,000 × 5% × 3 years = $1,500.00
Final balance
A = P × (1 + r × t) A = 10,000 × (1 + 0.05 × 3) = $11,500.00
Same figure, compounded annually
A = P × (1 + r)^t A = 10,000 × (1 + 0.05)^3 = $11,576.25
Rates are converted to a decimal (5% → 0.05) and time is converted to years before substitution, using a 365-day year for day counts.
| Period | Interest | Interest to date | Balance (simple) |
|---|---|---|---|
| Year 1 | $500.00 | $500.00 | $10,500.00 |
| Year 2 | $500.00 | $1,000.00 | $11,000.00 |
| Year 3 | $500.00 | $1,500.00 | $11,500.00 |
Assumptions
- Interest is calculated on the original principal for the whole period and is never added to the balance.
- A year is 365 days when you enter a term in days, and exactly 1/12 of a year per month when you enter months.
- Partial final years are pro-rated in the table, so a 3.5-year term shows a half-size fourth row.
- Most savings accounts, credit cards and mortgages use compound interest instead — simple interest is typical of short-term notes, some car loans and many private loans.
How to use the simple interest calculator
- Choose what you want to solve for: the interest amount, the principal, the rate or the time. The relevant input disappears and the target field appears in its place.
- Enter the three values you know. Time can be given in years, months or days — days use a 365-day year.
- Read the answer and the working. The formula panel shows the rearranged equation with your numbers substituted, which is what you need if you are checking homework or an invoice.
- Compare against the compound column to see what the same money would do if the interest were added to the balance each year.
The four forms of I = Prt
Simple interest has one equation and three rearrangements. Rates go in as decimals — 5% becomes 0.05 — and time goes in as years.
| Solve for | Formula | Example |
|---|---|---|
| Interest | I = P × r × t | 10,000 × 0.05 × 3 = 1,500 |
| Principal | P = I / (r × t) | 1,500 ÷ (0.05 × 3) = 10,000 |
| Rate | r = I / (P × t) | 1,500 ÷ (10,000 × 3) = 5% |
| Time | t = I / (P × r) | 1,500 ÷ (10,000 × 0.05) = 3 years |
| Final balance | A = P × (1 + r × t) | 10,000 × 1.15 = 11,500 |
Simple against compound
Simple interest is charged on the original principal only, so it grows in a straight line. Compound interest is charged on the balance including interest already added, so it curves. Over a year or two the difference is small; over decades it is the whole story.
| Years at 6% on 10,000 | Simple | Compound (annual) | Difference |
|---|---|---|---|
| 1 year | 10,600 | 10,600 | 0 |
| 5 years | 13,000 | 13,382 | 382 |
| 10 years | 16,000 | 17,908 | 1,908 |
| 20 years | 22,000 | 32,071 | 10,071 |
| 30 years | 28,000 | 57,435 | 29,435 |
Where simple interest is actually used
- Short-term promissory notes and bridging finance, where the term is measured in days and compounding would be immaterial.
- Many private and family loans, because it is easy to agree and easy to verify.
- US car loans, which are usually described as simple-interest loans — though this means interest accrues daily on the outstanding balance, so paying early genuinely reduces the interest charged.
- Statutory interest on late commercial payments in many jurisdictions, and court-awarded interest on damages.
- Bond coupon calculations between payment dates, where accrued interest is pro-rated on a day count basis.
Savings accounts, credit cards, mortgages and student loans nearly always compound instead. If a product quotes an APY or an AER, it is a compound figure.
Day counts and part years
This calculator converts days to years by dividing by 365. Financial contracts use several other conventions — 30/360, actual/360 and actual/365 are all common — and the choice changes the answer by up to about 1.4%. Check which convention your agreement specifies before relying on a day-count figure for anything contractual.
Questions
What is the simple interest formula?
I = P × r × t, where P is the principal, r is the annual rate as a decimal and t is the time in years. The final balance is A = P × (1 + r × t). The calculator substitutes your numbers into both.
How is it different from compound interest?
Simple interest is always charged on the original principal, so it grows in a straight line. Compound interest is charged on the balance including interest already added, so it curves upward. The comparison chart shows the gap for your figures.
Can I solve for the rate or the time?
Yes. Pick what you want to solve for and enter the other three values — the calculator rearranges the formula to P = I / (r × t), r = I / (P × t) or t = I / (P × r) and shows the rearranged working.
Where is simple interest actually used?
Short-term promissory notes, many private and family loans, some car loans, certain bond coupon calculations, and statutory interest on late payments. Savings accounts and credit cards almost always compound instead.