Simple Interest Calculator
Work out simple interest on a loan or deposit. Enter the principal, the annual rate, and the time in years, months, or days to see the interest and the total amount.
Interest
900.00
Check the highlighted fields to see your result.
- Total amount
- 5,900.00
- Interest per month
- 25.00
Results are estimates for information only and do not constitute financial, medical, or legal advice.
How simple interest works
With simple interest, you earn or pay the same amount of interest every period, because it is always calculated on the original principal. Interest is never added to the principal to earn more interest.
The formula
I = P × r × t
I is the interest, P is the principal, r is the annual rate as a decimal, and t is the time in years (months ÷ 12, days ÷ 365).
Worked example
You lend $5,000 at 6% simple interest for 3 years.
- Interest: $5,000 × 0.06 × 3 = $900.
- Total amount: $5,000 + $900 = $5,900.
Frequently asked questions
What's the difference between simple and compound interest?
Simple interest is always calculated on the original amount. Compound interest is calculated on the amount plus the interest already earned, so it grows faster over time. For long periods, the difference can be large.
Where is simple interest used?
In some short-term loans, car loans, bonds, and certificates of deposit that pay out interest instead of reinvesting it. Many personal and auto loans in the US also charge simple interest on the remaining balance.
How are days counted?
This calculator divides days by 365. Some banks use 360 days for a year, which gives slightly more interest. Check your contract if you need an exact amount.