Simple Interest Calculator
Calculate interest that is charged or earned only on the original amount, or work backwards to find the principal, rate or time.
Result
Enter your values and select Calculate to see the result.
How to use this calculator
- Choose what to calculate: interest, principal, rate or time.
- Fill in the other values. Time can be entered in years, months or days.
- The result shows all values together with the total amount.
Formula
I = P × r × t
where I is interest, P the principal, r the annual rate as a decimal and t the time in years. Rearranged:
- P = I ÷ (r × t)
- r = I ÷ (P × t)
- t = I ÷ (P × r)
The total amount is P + I.
Worked example
Interest on 5,000 at 4% for 3 years
5,000 × 0.04 × 3 = 600 interest, for a total of 5,600.
Finding the rate
750 interest on 5,000 over 3 years: 750 ÷ (5,000 × 3) = 0.05, or 5% a year.
Assumptions and limitations
- Interest does not compound; for compounding use the Compound Interest calculator.
- Days are converted to years using a 365-day year. Some lenders use 360 days (“banker’s year”).
- Solving for principal, rate or time requires the divisor values to be greater than zero.
Frequently asked questions
What is the difference between simple and compound interest?
Simple interest is always calculated on the original principal. Compound interest is calculated on the principal plus interest already earned, so it grows faster.
Where is simple interest used?
Some car loans, short-term personal loans, bonds’ coupon payments and certain savings certificates use simple interest.