Simple Interest Calculator
Simple interest runs on the original amount only, never on the interest itself. Many short-term loans and some bonds work this way.
Enter the principal, the annual rate, and the number of years. You get the interest and the final balance.
Interest details
Your interest
- Interest earned
- $1,500.00
- Final balance
- $11,500.00
$1,500.00 earned, the same step every year, straight-line growth
How the balance climbs
At 5% simple interest, $10,000.00 earns $1,500.00 over 3 years: a straight line to $11,500.00, the same $500.00 every year.
Balance by year
| Year | Interest to date | Balance |
|---|---|---|
| 1 | $500.00 | $10,500.00 |
| 2 | $1,000.00 | $11,000.00 |
| 3 | $1,500.00 | $11,500.00 |
Before you rely on this
Results are generic estimates using standard time-value-of-money formulas, the same math everywhere. Real-world figures depend on your country's tax rules, rounding, fees, and lender or product terms, which vary by jurisdiction. Treat this as a guide and confirm important numbers with a local professional.
How the simple interest calculation works
The formula: I = P × r × t. P is the principal, r the annual rate as a decimal, t the time in years. The final balance is the principal plus that interest.
Compound interest, by contrast, also pays interest on interest already earned. Over time it grows much faster, so for savings and investing that's the number that counts.
Tips
- Simple interest works well for short-term loans and quick estimates.
- Anything that compounds belongs in the compound interest calculator.
- Keep rate and time in the same unit: an annual rate needs the time in years.
Frequently asked questions
What is the simple interest formula?
I = P × r × t. Principal times the annual rate (as a decimal) times the years. For example, 1,000 at 5% for 3 years earns 150.
What's the difference between simple and compound interest?
Simple interest is paid only on the original principal. Compound interest is also paid on interest already earned, so it grows faster over time.
Where does simple interest show up?
Many short-term personal loans, some car loans, and certain bonds. Savings accounts and investments almost always compound.