Simple Interest Calculator
Calculate simple interest using the I = P × R × T formula. Find interest earned or owed on any principal, rate, and time period.
$
%
yrs
Simple Interest
—
Total Amount —
Daily Interest —
Monthly Interest —
How to Use This Calculator
- Enter the Principal Amount — the starting loan or investment amount.
- Enter the Annual Interest Rate.
- Enter the Time Period in years — use decimals for partial years.
- See the Simple Interest earned and Total Amount instantly.
Formula
Simple Interest Formula: I = P × R × T
Total Amount: A = P + I = P(1 + R × T)
- I = Interest, P = Principal, R = Rate (decimal), T = Time (years)
Example
Example: $5,000 principal, 6% annual rate, 3 years.
- Interest: $5,000 × 0.06 × 3 = $900
- Total Amount: $5,000 + $900 = $5,900
- Monthly Interest: $5,000 × 6% ÷ 12 = $25/month
Frequently Asked Questions
- Simple interest is calculated only on the original principal, not on accumulated interest. Formula: I = P × R × T. For example, $5,000 at 6% for 3 years earns $5,000 × 0.06 × 3 = $900 in simple interest.
- Simple interest is used for short-term loans, auto loans, some personal loans, and US Savings Bonds. Most bank accounts and mortgages use compound interest. Short-term same-day loans may use daily simple interest.
- Simple interest is calculated on principal only. Compound interest is calculated on principal plus previously earned interest. Over long periods, the difference is substantial. $5,000 at 6% for 20 years: simple = $6,000 interest, compound (annual) = $9,036.
- Rate = I ÷ (P × T). Time = I ÷ (P × R). For example, if $5,000 earns $900 in 3 years: Rate = $900 ÷ ($5,000 × 3) = 6% per year.
- Most consumer loans (mortgages, student loans, credit cards) use compound interest, not simple interest. Auto loans often use simple interest calculated daily. Always clarify with your lender which method applies.