How to use the simple interest calculator
Choose what you want to find, then fill in the other values. For example, to see how much interest a loan or deposit earns, choose Find interest and enter the principal, yearly rate and time. Time can be in years, months or days.
Simple interest formulas
Interest: I = P × R × T
Total amount: A = P × (1 + R × T)
Rate: R = I ÷ (P × T) · Time: T = I ÷ (P × R) · Principal: P = I ÷ (R × T)
R is the yearly rate as a decimal (6% = 0.06) and T is in years.
Example: $5,000 at 6% for 3 years earns 5,000 × 0.06 × 3 = $900 in interest, for a total of $5,900. With yearly compounding it would be about $955.08.
Simple vs compound interest
| $10,000 at 5% | Simple interest | Compound (yearly) |
|---|---|---|
| 1 year | $500 | $500 |
| 5 years | $2,500 | $2,763 |
| 10 years | $5,000 | $6,289 |
| 20 years | $10,000 | $16,533 |
Over short periods the two are almost the same; over decades, compounding wins by a wide margin. See our Compound Interest Calculator.
Frequently asked questions
What is simple interest?
Simple interest is calculated only on the original amount (the principal), never on interest already earned. The formula is I = P × R × T, where P is the principal, R the yearly rate as a decimal and T the time in years.
Where is simple interest used?
Many car loans, short-term personal loans, some bonds and certificates, and informal loans between people use simple interest. Most savings accounts and credit cards use compound interest instead.
Simple vs compound interest — which is bigger?
For the same rate and time, compound interest is always at least as large, because interest also earns interest. The gap grows over long periods; the table on this page shows the difference for your numbers.
How do I convert months or days to years?
Divide months by 12 and days by 365. For example, 18 months is 1.5 years and 90 days is about 0.247 years. This calculator lets you choose the unit directly.