Simple Interest Calculator

Simple interest is the cost you pay, or return you earn, on a principal amount, calculated only on that original balance and never on accumulated interest. The formula is I = P x r x t, where P is the principal, r is the annual rate as a decimal, and t is time in years. Borrow $5,000 at 6% for 3 years and you owe $900 in interest.

Simple interest grows in a straight line because it is always calculated on the original principal. Compound interest grows faster because each period's interest gets added to the balance and then earns interest itself. On a $10,000 loan at 5% over 10 years, simple interest costs $5,000 total; annual compounding costs about $6,289, a difference of $1,289.

Most US auto loans, many personal loans, and short-term installment loans use simple interest, so paying early reduces your total interest charge. Standard mortgages are also simple-interest loans: interest is charged each month on the remaining balance and is not compounded. Credit cards and most savings accounts use compound interest instead.

Interest = Principal x (Annual Rate / 100) x Years. Total = Principal + Interest. Monthly interest is Interest / (Years x 12). All results are rounded to the nearest cent. Enter the rate as a percentage (e.g., 5 for 5%), not as a decimal.

Yes. Enter time as a decimal fraction of a year: 6 months is 0.5, 3 months is 0.25, and 18 months is 1.5. The calculator accepts any non-negative value, so a 90-day loan on a 365-day year would be about 0.247.