Simple Interest Calculator
Simple interest is the most basic way to charge for borrowing or reward saving: interest is calculated only on the original principal, never on interest already earned. This simple interest calculator applies the classic I = P × r × t formula to find the interest and the total amount from a principal, an annual rate, and a length of time. Simple interest shows up in some short-term loans, certain bonds, and basic textbook problems, but most everyday accounts and loans use compound interest — so use this to understand the baseline, and the compound interest calculator to see how reinvested interest changes the picture.
Calculate
Default result: $150.00
Simple Interest Calculator · Materials
calculators.dev
Simple interest
1000 × 5 × 3
Shopping list
- Total amount (principal + interest)
- $1,150.00
Est. total
$150.00
Estimate — confirm w/ supplier · calculators.dev
This calculator provides estimates for general informational purposes only and is not financial, investment, tax, or legal advice. Results are projections based on the figures you enter and the stated assumptions, and actual outcomes will differ. Consult a qualified financial professional before making borrowing, saving, or investment decisions.
Reviewed by the calculators.dev team · Last updated 2026-06-24
Formula reviewed against Standard simple-interest formula I = P·r·t — common finance reference
How to calculate
Enter the principal, the annual interest rate, and the time in years. The calculator multiplies the three together for the interest, then adds the principal for the total. For $1,000 at 5% over 3 years, the interest is 1,000 × 0.05 × 3 = $150 and the total is $1,150. Because nothing compounds, doubling the time exactly doubles the interest — a useful contrast with compound growth.
I = P · r · t, and the total A = P(1 + r · t). I is the interest, P is the principal, r is the annual rate as a decimal, and t is the time in years. Unlike compound interest, the rate always applies to the original principal, so the interest grows in a straight line over time.
Example calculation
A $1,000 deposit at a 5% simple annual rate for 3 years earns $1,000 × 0.05 × 3 = $150 in interest, for a total of $1,150. Because simple interest is charged only on the original principal, the interest is the same $50 each year and does not snowball the way compound interest does.
- interest
- $150.00
- total
- $1,150.00
Assumptions
- Interest applies only to the original principal — no compounding on accrued interest.
- The rate and principal are constant over the whole period, with no payments or additions in between.
- Time is measured in years; for months or days, convert to a fraction of a year first.
Common mistakes
- Using simple interest where the account actually compounds, which understates the interest for deposits and the cost for loans.
- Entering the rate as a decimal (0.05) instead of a percentage (5).
- Mixing units of time — the rate is annual, so the time must be in years (use 0.5 for six months).
Frequently asked questions
What is the simple interest formula?
Interest equals principal times rate times time: I = P × r × t. For $1,000 at 5% for 3 years, that is 1,000 × 0.05 × 3 = $150.
How is simple interest different from compound interest?
Simple interest is charged only on the original principal, so it grows in a straight line. Compound interest is charged on the principal plus accumulated interest, so it grows faster over time.
Where is simple interest actually used?
Some short-term and auto loans, certain bonds, and many textbook problems. Most savings accounts, credit cards, and mortgages use compound interest instead.
How do I handle months instead of years?
Convert the time to a fraction of a year. Six months is 0.5 years, and three months is 0.25 years, because the rate entered is annual.