Simple Interest Calculator

Calculate simple interest and the total amount owed or earned from principal, rate and time.

$
%
Interest
$1,500.00
Balance over time
PrincipalInterest
$0$2,000$4,000$6,000$8,000$10K$12K00.61.21.82.43Years
Total (principal + interest)
$11,500.00
Interest per year
$500.00
Final balance
Principal: $10,000 (87%)Interest: $1,500 (13%)13%is growth
  • Principal$10,00087%
  • Interest$1,50013%
Show the working
  1. t = 3 years
  2. I = P × r × t = $10,000.00 × 0.05 × 3 = $1,500.00
  3. Total = $10,000.00 + $1,500.00 = $11,500.00

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Formula

I = P × r × tTotal A = P(1 + r·t)r = annual rate as a decimal, t = time in years

How it works

Simple interest is charged or earned only on the original principal. Unlike compound interest, the interest itself never earns more interest, so the balance grows in a straight line: the same dollar amount every year.

It is used for some short-term loans, many auto loans calculated on a daily simple-interest basis, Treasury bills and certain bonds, and informal loans between people. Most savings accounts and credit cards compound instead.

When time is given in days, the calculator converts it to years using an average year of 365.2425 days. Banks sometimes use a 360-day or 365-day year by convention, which can change the result by a few cents to a few dollars.

Frequently asked questions

How is simple interest different from compound interest?

With simple interest you only earn on the principal. With compound interest you also earn on interest already added. Over one year the two are close; over decades compound interest pulls far ahead.

How do I find the rate if I know the interest?

Rearrange the formula: r = I ÷ (P × t). For example, $600 of interest on $5,000 over 2 years is 600 ÷ 10,000 = 6% a year.

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