Simple Interest Calculator
Calculate interest charged only on the principal, with I = P × r × t.
Simple interest is calculated only on the original principal, using I = P × r × t, where P is the principal, r is the annual rate, and t is the time in years. A $1,000 deposit at 5% for 3 years earns $150 in interest, for $1,150 total. Unlike compound interest, it does not earn interest on interest. Enter principal, rate, and time.
These results are estimates for informational purposes only and are not financial, tax, or legal advice. Your actual figures from a lender or the IRS may differ. Consult a qualified professional before making decisions.
Total interest
$150.00
- Principal
- $1,000.00
- Interest (5% × 3 yr)
- $150.00
- Total value at maturity
- $1,150.00
About the Simple Interest Calculator
Simple interest is the most straightforward way to calculate the cost or growth of money. It applies the rate only to the original principal, never to interest already earned, using the formula I = P × r × t. Multiply the principal by the annual rate as a decimal and by the number of years, and you have the total interest. A $2,000 loan at 6% for 4 years accrues $480 in interest, whatever the schedule looks like along the way. The contrast that matters is with compound interest, which adds earned interest back to the balance so future interest is charged on a growing amount. Over a short period the two are close, but over many years compounding pulls well ahead. Simple interest shows up in some car loans, short-term personal loans, and certain bonds and certificates, while most savings accounts and credit cards compound. Check which method applies before relying on an estimate, because the same rate produces different totals under each.
Frequently asked questions
What is the formula for simple interest?+
I = P × r × t: principal times the annual rate as a decimal times the time in years. $1,000 at 5% for 3 years is 1000 × 0.05 × 3 = $150.
What is the difference between simple and compound interest?+
Simple interest is charged only on the original principal. Compound interest is charged on the principal plus any interest already added, so it grows faster over time.
Where is simple interest used?+
It is common in some auto loans, short-term personal loans, and certain bonds and certificates of deposit. Most savings accounts and credit cards use compound interest instead.
How do I find the total amount with simple interest?+
Add the interest to the principal. A $1,000 principal plus $150 of interest is $1,150 at maturity.