Simple interest is calculated only on the original amount — it never earns interest on itself, unlike compound interest. It's commonly used for short-term loans and some types of bonds. Enter your principal, rate, and time period below.
Simple Interest Calculator
LiveThe simple interest formula
P is the principal, r is the annual rate (as a decimal), and t is the time in years.
$5,000 at 5% simple interest for 3 years: 5000 × 0.05 × 3 = $750 in interest, for a total of $5,750.
Step-by-step guide
- Enter the principal — the original amount borrowed or invested.
- Enter the annual interest rate as a percentage.
- Enter the time period in years — use a decimal for partial years, like 0.5 for six months.
Common mistakes
Frequently asked questions
Where is simple interest actually used?
Some short-term personal loans, certain bonds, and add-on interest auto loans use simple interest. Most mortgages, credit cards, and savings accounts use compound interest instead.
How is this different from compound interest?
Simple interest is always calculated on the original principal only. Compound interest is recalculated on the growing balance (principal plus previously earned interest), so it grows faster the longer it runs. See our Compound Interest Calculator to compare directly.
Can I use this for a loan I'm paying off monthly?
Only if your loan specifically uses simple interest — most amortizing loans (mortgages, auto loans, personal loans) don't. For those, use our Loan Calculator instead, which models declining-balance amortization.
Related calculators
See the complete Financial Calculators guide for the full list, or try: