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Simple Interest Calculator
I = P x r x t — the classic formula. This simple interest calculator runs it in any direction: enter a principal, rate and term for the interest earned, or solve for whichever piece is missing, with a compound interest comparison beside every result.
See how this works on $10,000 at 5% — 3 real examples
Simple interest earned
$0
End balance
$0
Principal
$0
Interest
$0
Step by step
I = P × r × t
Simple vs compound interest
What the same money would earn if the interest compounded monthly instead.
Simple interest
$0
Compound interest
$0
Year-by-year scheduleInterest and balance per year
| Year | Interest (cumulative) | Simple balance | Compound balance |
|---|
How your simple interest is worked out
Simple interest is charged on the original principal only, so the interest earned each year never changes. The whole calculation is one line:
I = P × r × t and A = P + I
where P is the principal, r is the annual rate as a decimal, and t is the time in years. A term entered as years plus extra months becomes a fractionalt (six months = 0.5). If you enter the rate as a monthly rate, it is annualized by ×12 before the formula is applied. In solve modes the calculator simply rearranges the same equation —P = I ÷ (r·t), r = I ÷ (P·t), ort = I ÷ (P·r) — and writes the answer into the disabled field. The dashed compound line uses monthly compounding, so it earns interest on interest and always ends at or above the flat simple line.
The same $10,000, with and without the snowball
Simple interest pays the same flat amount every year. What that costs depends entirely on how long the money sits.
The short run: three years at 5%
simple interest$1,500
- A flat $500 a year, every year: 5% of $10,000, three times over.
- Compounded monthly instead, the same money would earn $1,615.
- The gap is $115 after three years — real, but small enough to shrug at.
Over a short term, flat and compounding are nearly the same product.
Load this example (opens in a new tab)The long run: thirty years at 5%
simple interest$15,000
- Still $500 a year — year thirty earns exactly what year one did.
- Compounded monthly, the same $10,000 earns $34,677 and the balance reaches $44,677.
- The gap widens from $115 to $19,677, a 131% larger return for the compounder.
The flat line never accelerates; the distance to the curve grows every single year.
Load this example (opens in a new tab)The inversion: when does $2,000 arrive?
time needed4 yrs
- A target of $2,000 in interest on $10,000 at 5% works out to exactly four years.
- Each of those years contributes the same flat $500; the fourth one closes the gap.
- By the end, the balance stands at $12,000: the original principal plus the target interest.
Three knowns, one unknown — the same one-line formula solves in any direction.
Load this example (opens in a new tab)Illustrations only, not financial advice. Your own rate, taxes and insurance will differ — check with a qualified financial advisor before acting on any of this.
Simple interest, in plain English
- ▸It never compounds. Interest is figured on your starting principal alone, so a fixed dollar amount is added every year — no snowball.
- ▸The formula is I = P × r × t. Three inputs, one multiplication. Change any slider and the interest, end balance and schedule update instantly.
- ▸Months count as fractions of a year. Enter whole years plus extra months and the term becomes a decimal t automatically.
- ▸Solve for what you don't know. Flip the mode to find the principal, rate or time that produces a target interest amount.
- ▸Compare with compound. The side-by-side panel shows how much more the same money would earn if it compounded — the core of simple interest vs compound interest.
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Frequently asked questions
What is simple interest?
Simple interest is interest charged only on the original principal — never on interest already earned. Because it does not compound, a $1,000 balance at 5% earns exactly $50 every year, so after 3 years you have earned $150. It is the model behind many car loans, some personal loans, and short-term notes.
What is the simple interest formula?
The simple interest formula is I = P × r × t, where P is the principal, r is the annual rate as a decimal, and t is the time in years. The total amount owed or earned is A = P + I. For example, $2,000 at 6% for 4 years earns I = 2000 × 0.06 × 4 = $480, for an end balance of $2,480.
How is simple interest different from compound interest?
Simple interest is always calculated on the original principal, so the interest earned each period stays flat. Compound interest is calculated on the growing balance, so it accelerates over time. This calculator shows both side by side: on $10,000 at 5% for 3 years, simple interest earns $1,500 while monthly-compounded interest earns about $1,614 — a gap that widens the longer you invest.
What financial instruments use simple interest?
Simple interest is common on many auto loans, some personal and student loans, short-term promissory notes, and certain bonds that pay a flat coupon. Most savings accounts, CDs, credit cards, and mortgages instead use compound interest, so always check which method a product uses before comparing rates.
How do I calculate simple interest for a period of months?
Convert the months to a fraction of a year and use it as t. Six months is 0.5 years, so $5,000 at 4% for 6 months earns I = 5000 × 0.04 × 0.5 = $100. This calculator does the conversion for you — enter whole years plus any extra months, and it adds them as a fractional year.
Can I solve for the rate or the time I need?
Yes. Switch the mode to Rate, Time, or Principal and enter the interest you want along with the two values you know. The calculator rearranges I = P × r × t algebraically — for example r = I ÷ (P × t) — and fills the missing figure into the disabled field so you can see the answer instantly.
Disclaimer: these calculators are educational tools, not financial advice. They model your inputs with published formulas, but they cannot know your full situation — for decisions with real stakes, talk to a qualified professional. Formulas and defaults last reviewed .