Simple Interest Calculator
Enter the principal, annual rate and time to get the simple interest and final amount, or switch tabs to solve for the principal, rate or time. Every answer shows I = P × r × t with your numbers.
Formula with your numbers
Growth schedule
| Year | Interest this period | Total interest | Balance |
|---|
Simple interest is charged on the original principal only, so it grows by the same amount every period. Interest is not added to the balance that earns interest.
How to use the Simple Interest Calculator
- Choose what to solve for: interest and amount (default), principal, rate or time.
- Enter the known values: principal, annual interest rate in %, time and its unit, or the interest amount.
- For days, pick a 365-day year or the 360-day banker's rule.
- Press Calculate (results also update as you type) to see the answer, the formula with your numbers and the schedule.
- Copy the result to paste it into notes, homework or an email.
Simple interest formulas
| Find | Formula | Example |
|---|---|---|
| Interest (I) | I = P × r × t | 10,000 × 0.05 × 3 = 1,500 |
| Final amount (A) | A = P + I = P(1 + rt) | 10,000 × (1 + 0.15) = 11,500 |
| Principal (P) | P = I ÷ (r × t) | 450 ÷ (0.03 × 5) = 3,000 |
| Rate (r) | r = I ÷ (P × t) | 300 ÷ (2,000 × 2) = 7.5% |
| Time (t) | t = I ÷ (P × r) | 500 ÷ (5,000 × 0.04) = 2.5 years |
Always write the rate as a decimal (5% = 0.05) and the time in years (6 months = 0.5, 90 days = 90/365).
Simple vs. compound interest on 10,000 at 6%
| Years | Simple interest balance | Compound (yearly) balance | Difference |
|---|---|---|---|
| 1 | 10,600.00 | 10,600.00 | 0.00 |
| 5 | 13,000.00 | 13,382.26 | 382.26 |
| 10 | 16,000.00 | 17,908.48 | 1,908.48 |
| 20 | 22,000.00 | 32,071.35 | 10,071.35 |
| 30 | 28,000.00 | 57,434.91 | 29,434.91 |
Over one year the two methods agree, but compound interest pulls far ahead over long periods because interest earns interest.
Worked example with days
A short-term loan of 2,500 at 8% per year runs for 120 days.
- Actual/365: I = 2,500 × 0.08 × 120/365 = 65.75, so you repay 2,565.75.
- Banker's rule (360): I = 2,500 × 0.08 × 120/360 = 66.67, so you repay 2,566.67.
Frequently asked questions
What is the simple interest formula?
Simple interest is I = P × r × t, where P is the principal, r the annual rate as a decimal and t the time in years. The final amount is A = P + I = P(1 + rt). For example 10,000 at 5% for 3 years earns 10,000 × 0.05 × 3 = 1,500.
How do I calculate simple interest for months or days?
Convert the time to years first. For months divide by 12, so 18 months is 1.5 years. For days divide by 365 (or 360 with the banker's rule), so 90 days at 6% on 10,000 is 10,000 × 0.06 × 90/365 = 147.95.
What is the difference between simple and compound interest?
Simple interest is always calculated on the original principal, so it grows by the same amount each period. Compound interest is calculated on the principal plus interest already earned, so it grows faster over time.
How do I find the rate from the interest?
Rearrange the formula: r = I ÷ (P × t). If 2,000 earns 300 in 2 years, the rate is 300 ÷ (2,000 × 2) = 0.075, or 7.5% per year.
How do I find how long it takes to earn a given interest?
Use t = I ÷ (P × r). To earn 500 on 5,000 at 4% you need 500 ÷ (5,000 × 0.04) = 2.5 years, or 30 months.
What is the 360-day banker's rule?
Some banks and money-market instruments count a year as 360 days when working out daily interest. This makes the daily rate slightly higher than with a 365-day year, so the interest for the same number of days is about 1.4% larger.
Where is simple interest used?
Simple interest is common for short-term loans, car loans in some countries, certificates of deposit that pay out interest, treasury bills and many classroom problems. Most savings accounts and mortgages use compound interest instead.