Simple Interest Calculator
How to Use This Calculator
- Enter the principal (initial amount).
- Enter the annual interest rate as a percentage.
- Enter the time in years.
- Click "Calculate Interest" to see interest earned and the total amount.
Simple Interest Formula & Example
I = P × r × t
Total Amount A = P + I = P(1 + rt), where P = principal, r = annual rate (decimal), t = time in years.
Worked Example
$10,000 at 5% for 3 years: I = $10,000 × 0.05 × 3 = $1,500. Total = $10,000 + $1,500 = $11,500.
Frequently Asked Questions
What is the difference between simple and compound interest?
Simple interest is calculated only on the original principal. Compound interest is calculated on principal plus accumulated interest, so it grows faster. Most savings accounts and investments use compound interest; some short-term loans use simple interest.
How do I calculate simple interest for months instead of years?
Convert months to years: t = months ÷ 12. For 6 months at 5% on $10,000: I = $10,000 × 0.05 × 0.5 = $250.
Where is simple interest used?
Common in auto loans, short-term personal loans, and some bonds. It's transparent and easy to verify — but always check whether your loan actually uses simple or compound (amortized) interest, as most mortgages compound monthly.
Shahnawaz
Shahnawaz is the founder of DaProfitClub, a free online platform offering 100+ calculators and converters for finance, health, math, and everyday life. With a background in finance and mathematics, he designs accurate, easy-to-use tools.
Sources: U.S. Securities and Exchange Commission (investor.gov) — interest rate basics; Khan Academy — simple interest formula.