Simple Interest Calculator

Simple interest is I = P × r × t, where P is the principal (starting amount), r is the annual interest rate as a decimal, and t is the time in years. The total amount you'll have or owe is P + I.

Multiply the principal by the annual rate and by the number of years. For example, $10,000 at 5% for 3 years earns $10,000 × 0.05 × 3 = $1,500 in interest, for a total of $11,500.

Simple interest is calculated only on the original principal, so the interest amount is the same every period. Compound interest is calculated on the principal plus all previously accrued interest, so it grows faster over time. The longer the term, the bigger the gap.

Simple interest appears in some short-term and personal loans, certain auto loans, and many bonds and treasury bills. Most savings accounts, credit cards, and mortgages use compound interest instead.

Yes. Enter the time in years as a decimal — for example, 6 months is 0.5 and 3 months is 0.25. The formula scales the interest proportionally to the time held.