Simple Interest Calculator
Enter the principal, annual interest rate, and time period to calculate simple interest (no compounding).
Last updated: September 21, 2026
Frequently asked questions
How do I calculate simple interest?
Interest = principal × rate × time, where rate is expressed as a decimal (or divided by 100 if using a percentage) and time is in years. A $1,000 principal at 5% for 3 years earns $1,000 × 0.05 × 3 = $150.
What's the difference between simple and compound interest?
Simple interest is calculated only on the original principal for the entire period. Compound interest is recalculated periodically on the growing balance (principal plus previously earned interest), so it grows faster over time - use the compound interest calculator for compounding scenarios.
Where is simple interest actually used?
Some short-term loans, certain bonds, and basic promissory notes use simple interest, since it's straightforward to calculate. Most savings accounts, credit cards, and mortgages use compound interest instead.
Does simple interest ever beat compound interest?
For a single compounding period (like one year with annual compounding), simple and compound interest give the same result. Over multiple periods, compound interest always produces more total interest for the lender/investor (or costs more for the borrower) than simple interest at the same nominal rate.
How much total will I repay on a $2,000 loan at 4% simple interest over 5 years?
Interest = $2,000 × 0.04 × 5 = $400, so total repayment is $2,000 + $400 = $2,400 - simple interest stays flat each year since it's always calculated on the original $2,000, not a growing balance.
Can I use this calculator for a time period in months instead of years?
Convert months to years first by dividing by 12 - for a 6-month period, enter 0.5 for time, since the formula (principal × rate × time) expects time in years to match the annual interest rate.
Is a simple interest calculator useful for a savings account?
Rarely - most savings accounts compound interest (typically daily or monthly), so a simple interest calculation would understate actual growth. Simple interest calculators are more accurate for products explicitly structured that way, like some short-term promissory notes or certain installment loans.