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Simple Interest Calculator - Basic Interest Calculator

Free simple interest calculator. Calculate interest earned on principal using the simple interest formula I = P × r × t. Easy to use for loans and savings.

Simple Interest Calculator

Calculate interest using the simple interest formula

$

The initial amount of money (loan or investment).

%

The yearly interest rate as a percentage.

years

Duration of the loan or investment.

Select the unit for time period.

Interest Results

Enter your values to see results

and click the "Calculate" button

What is Simple Interest?

Simple interest is calculated only on the original principal amount. Unlike compound interest, earned interest is not added back to the principal, so you earn (or pay) the same amount of interest each period. Simple interest is commonly used for short-term loans, car loans, some personal loans, and certificates of deposit. The formula is straightforward: Interest = Principal × Rate × Time.

How to Use This Calculator

  1. Enter the principal amount (original sum)
  2. Enter the annual interest rate as a percentage
  3. Enter the time period
  4. Select the time unit (years, months, or days)
  5. Click Calculate to see your results

Simple Interest Formula

I = P × r × t

Where I = Interest earned, P = Principal (initial amount), r = Annual interest rate (as decimal, so 5% = 0.05), t = Time in years. Total Amount = P + I = P(1 + rt)

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. Example: $1,000 at 10% for 2 years - Simple: $200 interest, Compound: $210 interest. The difference grows dramatically over longer periods.
How do I calculate simple interest manually?
Use the formula I = P × r × t. Convert the percentage to decimal (divide by 100) and time to years. Example: $5,000 at 6% for 2 years = $5,000 × 0.06 × 2 = $600 interest.
Is simple interest good or bad for borrowers?
Simple interest is generally better for borrowers because you pay less total interest over the loan term. With compound interest, unpaid interest gets added to the principal, increasing what you owe.
Is simple interest good or bad for investors?
Simple interest is worse for investors compared to compound interest. With compound interest, your earnings generate their own earnings, leading to exponential growth. For long-term investing, always prefer compound interest.
How do I convert months or days to years?
Months to years: divide by 12. Days to years: divide by 365. Example: 6 months = 0.5 years, 90 days = 0.247 years. Our calculator does this automatically.
What loans use simple interest?
Car loans, some personal loans, student loans (federal), payday loans, and some mortgages use simple interest. Credit cards typically use compound interest (which is worse for borrowers).
Can I pay less interest on a simple interest loan?
Yes! Making extra payments or paying early reduces total interest because interest is calculated daily on the remaining principal. This is a key advantage of simple interest loans.
What is the Rule of 100 for simple interest?
To double your money with simple interest: Years = 100 ÷ Interest Rate. At 5%, it takes 20 years. At 10%, it takes 10 years. Compare this to compound interest's Rule of 72, which is much faster.

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