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Simple Interest Calculator
Enter an amount, a yearly rate and a number of years. You get the interest, the total and a comparison with compound interest.
Example
$10,000 at 5% simple interest for 5 years earns $2,500, for a total of $12,500. With yearly compounding the total would be $12,763.
How the simple interest calculator works
Simple interest is charged only on the original amount. The formula is I = P × r × t, where P is the principal, r the yearly rate as a decimal and t the time in years.
Because the interest never earns interest of its own, the balance grows in a straight line. Compound interest curves upward, and the gap between the two widens with time.
Simple interest is common in short-term loans, some car loans and bonds that pay a fixed coupon.
Common questions
What is the difference between simple and compound interest?
Simple interest is calculated on the principal only. Compound interest is calculated on the principal plus the interest already added, so it grows faster.
How do I calculate simple interest for months or days?
Express the time as a fraction of a year. Six months is 0.5 years, and 90 days is 90 divided by 365.
Is simple interest better for borrowers?
At the same rate, yes, because you pay less interest than with compounding. Always compare the full cost of two loans, since rates and fees usually differ too.