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Simple Interest Calculator
Work out the interest and total amount on a loan or deposit using the simple interest formula. Enter the principal, rate and time, then press Calculate.
Written by TopicDrill Editorial Team·Updated June 2026
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How simple interest works
Simple interest is the most basic way to charge or earn interest. You multiply the principal by the annual rate and the number of years. Because it ignores any interest already earned, the amount is the same every year, which makes it easy to plan around.
The formula is I = P × r × t. For example, $10,000 at 5% for 3 years earns 10,000 × 0.05 × 3 = $1,500 in interest, for a total of $11,500. Double the time and the interest simply doubles to $3,000.
Simple vs compound interest
The key difference is what the rate applies to. Simple interest always applies to the original principal, so it grows in a straight line. Compound interest applies to the principal plus accumulated interest, so it accelerates. If you are investing for the long term, try our compound interest calculator to see the difference.
Things to keep in mind
Always confirm whether a product uses simple or compound interest before comparing offers. For consumer borrowing basics, the Consumer Financial Protection Bureau is a reliable source. Browse all of our free calculators for more.
Frequently asked questions
What is simple interest?
Simple interest is interest calculated only on the original principal, not on any interest already earned. It stays the same each period, which makes it easy to predict. Many short-term loans and some deposits use simple interest.
What is the simple interest formula?
The formula is I = P × r × t, where I is the interest, P is the principal, r is the annual rate as a decimal, and t is the time in years. The total amount you repay or receive is the principal plus the interest, or A = P(1 + r·t).
How is simple interest different from compound interest?
Simple interest is paid only on the principal, so it grows in a straight line. Compound interest is paid on the principal plus past interest, so it grows faster over time. For long horizons, compound interest produces a much larger balance.
When is simple interest used?
It is common for car loans, short-term personal loans, some bonds and certain savings products. It is also used in classrooms because the math is straightforward and easy to verify by hand.
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