Simple Interest Calculator

Total Amount

$1,150.00

The Numbers

  • Interest earned: $150.00

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Includes your inputs and results for this calculation, plus any additional calculations you've compared.

Disclaimer

This calculator provides estimates for informational purposes only and does not constitute financial, medical, legal, or tax advice. Always consult a qualified professional about your specific situation.

How This Calculator Works

Simple interest is interest that accrues only on the original amount you started with, never on interest you’ve already earned. Enter a principal amount, an annual interest rate, and a time period, and this calculator computes exactly how much interest accrues and the total amount at the end.

This is different from the Compound Interest Calculator, where interest earned in one period gets added to the balance and starts earning its own interest the next period. Simple interest is genuinely used for some short-term loans, certain bonds and promissory notes, and is usually the first way interest is taught in a math class before compounding is introduced.

The Formula

I=P×r100×tI = \vA{P} \times \frac{\vB{r}}{100} \times \vC{t}

where II is the interest earned, P\vA{P} is the principal, r\vB{r} is the annual interest rate as a percent, and t\vC{t} is the time in years (a 6-month period is entered as 0.5). The total amount at the end is simply P+I\vA{P} + I.

Worked Example

A $1,000 principal at a 5% annual rate for 3 years:

  1. Interest: I=1,000×5100×3=$150I = \vA{1{,}000} \times \frac{\vB{5}}{100} \times \vC{3} = \$150.
  2. Total amount: $1,000+$150=$1,150\$1{,}000 + \$150 = \$1{,}150.

Because simple interest never compounds, doubling the time period exactly doubles the interest — 6 years at the same rate would earn exactly $300, not more.

Source: Wikipedia: Interest (Simple Interest).

Frequently Asked Questions

What is the difference between simple and compound interest?

Simple interest accrues only on the original principal, so it grows by the same dollar amount every period. Compound interest adds each period's interest back into the balance, so future interest is earned on that interest too — which grows faster over time. Use the Compound Interest Calculator if your account or loan compounds.

How do I calculate simple interest?

Multiply the principal by the annual interest rate (as a decimal) by the time in years: Interest = Principal x Rate x Time. Add that to the principal for the total amount.

What real-world situations use simple interest?

Some short-term personal loans, certain bonds and promissory notes, and car loans in some cases use simple interest. Most savings accounts, credit cards, and mortgages compound instead — check your specific account or loan terms.