Simple Interest Calculator
Interest the simple way: enter the principal, the annual rate and the time — see the interest and the total.
About this tool
Simple interest is the original interest formula — I = P × r × t — where interest is earned only on the original principal, never on past interest. It still governs many short-term loans, some bonds, late-payment penalties and most textbook problems.
Its famous sibling, compound interest, earns interest on interest and grows faster; over long horizons the difference is enormous. This calculator is deliberately the simple one: transparent, linear, and exactly what the formula says. For a rough comparison, at 5% for 3 years $1,000 earns $150 simple — compounding annually would earn about $158.
How to use it
- Enter the principal (the starting amount).
- Enter the annual interest rate in percent.
- Enter the time — in years (fractions allowed, e.g. 2.5) or switch the unit to months.
Frequently asked questions
What is the simple interest formula?
I = P × r × t: interest = principal × annual rate (as a decimal) × time in years. Total value = P + I = P × (1 + r × t).
Simple vs compound interest — what's the difference?
Simple interest is calculated only on the original principal. Compound interest is calculated on the principal plus all interest already earned, so it accelerates. Most savings accounts and credit cards use compound interest.
Can the time be in months?
Yes — switch the time unit next to the field to months and enter the number of months; the calculator converts them to years (months ÷ 12) for the formula.