Simple Interest Calculator
With simple interest, interest is always charged on the original principal — no "interest on interest". Enter the principal, the rate and the time to see the interest and the total, and compare it with compounding.
Your numbers
Result
- Principal
- $1,000.00
| Item | Value |
|---|---|
| Principal | $1,000.00 |
| Interest (5% × 3 yr) | $150.00 |
| Total | $1,150.00 |
How to calculate simple interest
The formula is I = P × r × t, where P is the principal, r the rate per period and t the number of periods. The total is P + I. So $1,000 at 5% a year for 3 years earns 1,000 × 0.05 × 3 = $150, for a $1,150 total. Keep the rate and time in the same unit — both yearly, or both monthly.
Simple vs. compound interest
Simple interest is always on the original amount, so it grows in a straight line. Compound interest earns on the interest too, so it grows exponentially. Over short periods the difference is small; over long ones it is huge. Most loans and investments actually use compound interest.
Where simple interest shows up
You still see it in some short-term loans, certain bonds, and quick day-to-day estimates. But watch out: a contract quoting a "simple" rate may compound in practice. When comparing borrowing costs, look at the APR and the total you actually repay.
Informational and educational result. Not a substitute for professional advice.
Frequently asked questions
Sources
- Simple interest (I = P × r × t)
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