Simple Interest Calculator
Compute simple (non-compounded) interest on savings, loans, or short-term notes in seconds.
Enter a principal amount, an annual interest rate, and a time period to see exactly how much simple interest accrues and what the total balance will be. Simple interest is paid on the original principal only — no compounding — which makes it the right math for personal loans, short-term notes, and quick back-of-the-envelope comparisons.
How to use this calculator
- Step 1: Enter the principal — the amount of money the interest is calculated on (e.g. $5,000).
- Step 2: Enter the annual interest rate as a percentage (e.g. 4 for 4%).
- Step 3: Enter the time period in years — fractions like 0.5 for six months work too.
- Step 4: Hit Calculate to see the interest earned and the total amount (principal + interest).
The formula
Interest = principal × (annual rate / 100) × years; Total = principal + interest
Worked example
Putting $5,000 to work at 4% simple interest for 5 years earns $1,000.00 in interest (5,000 × 0.04 × 5), for a total of $6,000.00. Because nothing compounds, the balance grows by exactly $200 every year.
Frequently Asked Questions
What is simple interest?
Simple interest is interest calculated only on the original principal, using the formula I = P × R × T. It does not compound, so interest earned in one period is not added to the balance for the next period. It is the standard for many personal loans, auto loans, and short-term notes.
How do I calculate simple interest by hand?
Multiply the principal by the annual rate (as a decimal) and then by the number of years. For example, $10,000 at 5% for 3 years is 10,000 × 0.05 × 3 = $1,500 in interest, for a total of $11,500. This calculator does the same math instantly, including fractional years.
What is the difference between simple interest and compound interest?
With simple interest, you earn interest only on the original principal. With compound interest, each period’s interest is added to the balance, so future interest is earned on prior interest too. Over long periods compounding earns noticeably more — a savings account at 5% compounded monthly beats 5% simple interest by about $116 per $10,000 each year.
When is simple interest actually used?
Simple interest shows up in personal loans between individuals, some auto loans, short-term business loans, and certain bonds and Treasury bills. Most bank savings accounts and CDs use compound interest instead. If your account compounds, use an APY calculator rather than this one.
Does the rate have to be entered as a decimal?
No — enter it as a plain percentage, e.g. 5 for 5%. The calculator converts it to a decimal internally. Rates can include decimals too, such as 4.25 for 4.25%.