Calculate simple interest on a principal amount at a fixed rate over any period, and see the total you will pay or earn.
The simple interest formula
Interest = P × r × t
P is the principal, r is the annual rate as a decimal and t is the time in years. Simple interest is charged only on the original principal, never on interest already earned.
Worked example
$5,000 at 6% for 3 years earns $5,000 × 0.06 × 3 = $900 of simple interest, for a total of $5,900. With yearly compounding, the same deposit would grow to $5,955.08, earning $55 more.
Where simple interest is used
- Many auto loans and some personal loans (interest is charged on the outstanding balance each day).
- Short-term loans and some promissory notes.
- Treasury bills and some bonds pay simple interest on their face value.
Most savings accounts and investments use compound interest instead. See the compound interest calculator.
Frequently asked questions
Is simple interest better for borrowers?
Yes, all else being equal, because interest does not build on interest. Paying a simple-interest loan early also reduces the interest you owe.
How do I convert months or days to years?
Divide months by 12 and days by 365. The calculator does this automatically.
Related tools
Results are estimates for planning and education only. They are not financial, tax, legal or medical advice. Check important numbers with a qualified professional.