Simple Interest Calculator
Simple interest is worked out on the starting amount only.
Simple interest is a fixed percent of the starting amount, charged or earned for each year. Enter the principal, rate and time to get the interest and the total, or solve for whichever one you don't know. The table shows how simple interest compares with compound interest over the same period.
Add the interest to the principal for the total: $5,600
One Formula, Four Ways
I = P × r × t links four numbers. Know any three and you can find the fourth. Rate is a decimal (4% = 0.04) and time is in years.
| To find | Formula | Example |
|---|---|---|
| Interest | I = P × r × t | 5,000 × 0.04 × 3 = $600 |
| Total amount | A = P × (1 + r × t) | 5,000 × 1.12 = $5,600 |
| Rate | r = I ÷ (P × t) | 600 ÷ 15,000 = 0.04 = 4% |
| Time | t = I ÷ (P × r) | 600 ÷ 200 = 3 years |
| Principal | P = A ÷ (1 + r × t) | 5,600 ÷ 1.12 = $5,000 |
Months and Days Become Years
Interest rates are almost always quoted per year, so the time has to be in years too.
Months
Divide by 12. $1,200 at 6% for 18 months:
Days (exact)
Divide by 365. $20,000 at 3.5% for 90 days:
Days (banker's year)
Some loans divide by 360, which charges slightly more:
Interest on Interest Adds Up
Simple interest adds the same amount every year. Compound interest adds a percent of the growing balance. Here is $10,000 at 5%.
| After | Simple | Compounded yearly | Difference |
|---|---|---|---|
| 1 year | $10,500 | $10,500 | $0 |
| 5 years | $12,500 | $12,763 | $263 |
| 10 years | $15,000 | $16,289 | $1,289 |
| 20 years | $20,000 | $26,533 | $6,533 |
| 30 years | $25,000 | $43,219 | $18,219 |
Simple Interest on a 4 Function Calculator
Type the rate as a decimal and multiply straight through on a basic calculator.
Interest
Rate
90 Days
See both kinds of interest side by side, with the rule of 72, in Simple vs Compound Interest: Formulas and Examples.
Explore Other Calculators
Frequently Asked Questions
What is the simple interest formula?
I = P × r × t, with the rate as a decimal and the time in years. $5,000 at 4% for 3 years earns 5,000 × 0.04 × 3 = $600, for a total of $5,600.
How do you calculate simple interest for months or days?
Turn the time into years first. 18 months is 1.5 years. 90 days is 90 ÷ 365 years, so $20,000 at 3.5% for 90 days earns 20,000 × 0.035 × 90 ÷ 365 = $172.60. Some banks divide by 360.
What is the difference between simple and compound interest?
Simple interest is always on the original principal; compound interest is on the growing balance. $10,000 at 5% for 20 years becomes $20,000 with simple interest but $26,533 compounded yearly.
How do you find the interest rate?
Rate = interest ÷ (principal × time). If $5,000 grows to $5,600 in 3 years, the rate is 600 ÷ (5,000 × 3) = 4% a year.
How long does it take to double money with simple interest?
100 ÷ the yearly rate. At 5%, 100 ÷ 5 = 20 years. With yearly compounding it's about 72 ÷ 5 = 14.4 years (the rule of 72).
Is simple interest better for a borrower?
At the same rate and term, yes: there's no interest on interest, so the total cost is lower. For savers it's the opposite. Compare the APR or APY, not just the headline rate.