Growth Over Time
123 years
PrincipalInterest
Formula
I = P × r × t
Simple interest is the principal (P) times the annual rate (r) times the number of years (t). Unlike compound interest, it is calculated only on the original principal, so the interest amount is the same every year.
What is a Simple Interest Calculator?
A simple interest calculator works out the interest earned or owed on a fixed principal over time, using a constant annual rate. Simple interest is charged only on the original principal and never on previously earned interest, so the amount added each year stays the same. Enter your principal, the annual interest rate and the number of years, and the calculator shows the total interest, the final amount and the equivalent monthly interest, plus a chart of how the balance grows. It is the model used by many short-term loans, car loans and some bonds.
How to Use
1. Enter the principal - the starting amount you invest or borrow.
2. Enter the annual interest rate as a percentage.
3. Enter the term in years.
4. Read the total amount, total interest and monthly interest, and use the growth chart to see how the balance builds year by year.
How It Works
Simple interest uses the formula I = P x r x t, where P is the principal, r is the annual rate (as a decimal) and t is the time in years. The total amount is A = P + I = P x (1 + r x t). For example, $1,000 at 5% for 3 years earns 1000 x 0.05 x 3 = $150 in interest, for a total of $1,150. Because the rate is applied only to the original principal, the interest is identical each year - here, $50 per year.
Interpreting Results
The total interest tells you the cost of a loan or the return on an investment, and the total amount is what you end up with or repay. Because simple interest ignores compounding, it grows in a straight line - the chart is a steady, linear climb rather than the accelerating curve of compound interest. For the same rate and term, simple interest always yields less than compound interest, so it favours borrowers and understates long-term investment growth. Use it for short-term, fixed-rate situations and switch to a compound interest calculator for savings or long-term investing.
Frequently Asked Questions
What is the difference between simple and compound interest? ▾
Simple interest is calculated only on the original principal, so the same amount is added every period. Compound interest is calculated on the principal plus any interest already earned, so it grows faster over time. For the same rate and term, compound interest always produces a larger total.
What is the simple interest formula? ▾
The interest is I = P x r x t, where P is the principal, r is the annual rate as a decimal and t is the time in years. The final amount is A = P x (1 + r x t).
When is simple interest used? ▾
Simple interest is common in short-term and fixed instalment loans such as some car loans and personal loans, certain bonds, and many informal or short-term arrangements. Most savings accounts and long-term loans use compound interest instead.
How do I find the monthly interest? ▾
Divide the total interest by the number of months, or compute P x r / 12 for one month at a constant annual rate. This calculator shows the monthly interest automatically.
Does a higher rate or longer term matter more? ▾
With simple interest both have a direct, linear effect: doubling the rate or doubling the years both double the interest. Compounding would make a longer term more powerful, but simple interest treats rate and time symmetrically.
This calculator provides general estimates for educational purposes only and is not financial advice. Real loans and investments may use compound interest, fees or variable rates that change the result. Consult a qualified financial professional before making decisions.