How to use the simple Interest Calculator
- Enter the principal.
- Enter the annual interest rate (in %).
- Enter the time.
- Choose the time in from the list.
- Choose the currency from the list.
- The result updates instantly as you type. There is no button to press.
- Use Copy result to copy the figures, or Copy link to share a link that reopens the simple Interest Calculator with the same inputs.
How it works
Simple interest is charged or earned only on the original principal, never on interest that has already built up. That makes it easy to calculate and predict: the interest is the same every year, and the total grows in a straight line instead of the upward curve of compound interest.
You will meet simple interest in short-term loans, some car loans, certain bonds that pay fixed coupons, treasury bills, informal loans between family members and many classroom problems. Some lenders also quote a "flat rate" that is really simple interest on the original amount, which makes a loan look cheaper than an amortizing loan with the same headline rate.
The time you enter is converted to years. For days, banks use one of two conventions: actual/365, where a year has 365 days, or actual/360, common in money markets and commercial lending. The 360-day convention gives slightly more interest for the same number of days, which is why the calculator lets you choose.
Formula
I is the interest, P the principal, r the annual rate as a decimal (5% = 0.05), t the time in years and A the total amount at the end. For months, t = months ÷ 12; for days, t = days ÷ 365 or ÷ 360.
Example
You lend $5,000 at 5% simple interest for 3 years. The interest is 5,000 × 0.05 × 3 = $750, or $250 a year, and you get back $5,750 in total. With 5% compounded yearly instead, the total would be $5,788.13, about $38 more, because the second and third years would also earn interest on earlier interest.
Frequently asked questions
What is the difference between simple and compound interest?
Simple interest is calculated only on the original principal. Compound interest is calculated on the principal plus any interest already added. Over time, compound interest grows faster.
How do I find the rate or time instead?
Rearrange the formula: r = I ÷ (P × t) and t = I ÷ (P × r). For example, $300 interest on $2,000 over 3 years means r = 300 ÷ 6,000 = 5%.
Why does the 360-day option give more interest?
Dividing by 360 instead of 365 makes each day a slightly larger share of a year, so 90 days counts as 0.25 years instead of about 0.2466 years.
Disclaimer: This calculator gives estimates for general information and education. It is not financial, tax or investment advice. Lenders, banks and tax authorities may round differently, charge fees or apply rules this tool does not model, so confirm figures with a qualified professional or your provider before making decisions.