Finance calculator

Free interest calculator

Calculate how much interest you'll earn or pay — enter principal, rate, and time to get simple interest, compound interest, and APY, updated live, as you type.

Your figures
Simple interest
Simple interest

$150.00

Total balance: $1,150.00. I = P × r × t.

Results are estimates. Consult a professional.

How it's calculated

How the interest calculator works

This interest calculator computes the interest earned or charged on a sum of money using the simple interest method. Simple interest is calculated on the original principal only — there is no compounding. The result is the amount of interest accrued, and the total amount (principal plus interest) at the end of the term.

Simple interest is the foundation of consumer lending disclosures. The Truth in Lending Act (TILA) requires lenders to express the cost of credit in a standardised way, and simple interest underpins the APR calculation that appears on every consumer loan offer. Understanding it helps you compare loan costs and evaluate savings offers accurately.

I = P × r × t
Total = P + I
Federal Reserve — Consumer Compliance Handbook: Truth in Lending (simple interest and APR calculation basis).
Example

Worked example: $8,000 at 5% simple interest for 2 years

Example: $8,000 at 5% simple interest, 2 years

Casey deposits $8,000 in a savings account paying 5% simple interest annually. After 2 years, the account earns $800 in interest, bringing the total to $8,800. Because interest is simple, year 1 and year 2 each produce exactly $400 — there is no acceleration.

I = 8,000 × 0.05 × 2
I = 8,000 × 0.10
I = $800
Total = $8,000 + $800 = $8,800
$8,800 total
$8,000 at 5% simple interest for 2 years returns $800 in interest for a total of $8,800. At 5% monthly compounding over the same 2 years, the same principal would grow to $8,836 — the $36 difference illustrates the cost of not compounding.
Quick reference

Interest earned on common balances and rates

The table shows the interest earned (not the total balance) for five common principal amounts at three rates over one, two, three, and five years using simple interest.

PrincipalRate1 year2 years3 years5 years
$1,0004%$40$80$120$200
$1,0006%$60$120$180$300
$1,0008%$80$160$240$400
$3,0004%$120$240$360$600
$3,0006%$180$360$540$900
$3,0008%$240$480$720$1,200
$5,0004%$200$400$600$1,000
$5,0006%$300$600$900$1,500
$5,0008%$400$800$1,200$2,000
$10,0004%$400$800$1,200$2,000
$10,0006%$600$1,200$1,800$3,000
$10,0008%$800$1,600$2,400$4,000
$25,0004%$1,000$2,000$3,000$5,000
$25,0006%$1,500$3,000$4,500$7,500
$25,0008%$2,000$4,000$6,000$10,000

Interest only (I = P × r × t). Principal is unchanged throughout. Source: Federal Reserve consumer finance reference methodology.

Practical tips

Tips for using this interest calculator

Simple interest is more transparent than compound interest, but a few practical points help you apply it correctly in real situations.

  • Convert sub-year terms before calculating — a 6-month loan uses t = 0.5, not 6. Forgetting to divide months by 12 overstates the interest by a factor of 12.
  • Check whether your lender uses simple or compound interest — credit cards always compound; many personal and auto loans use simple interest. The difference matters more at higher balances and longer terms.
  • Use this calculator to verify APR disclosures — if a lender quotes a dollar amount of interest over a term, you can back-calculate the implied rate: r = I ÷ (P × t). If it differs from the stated APR, ask why.
  • Understand that early repayment saves more on simple-interest loans — because interest accrues linearly on the outstanding principal, each early payment reduces the base for all future interest charges immediately.
  • Compare total interest, not monthly payments — a lower monthly payment achieved by extending the term often means more total interest paid. The quick-ref table makes this visible: a 5-year term charges more than 2× the interest of a 2-year term.
Accuracy & limits

Accuracy and limitations

This calculator applies the standard simple interest formula I = P × r × t. It assumes a fixed rate and constant principal for the entire term. It does not model compounding, fees, taxes, early repayment, or amortisation (where each payment reduces the principal and therefore the next period's interest). For compound interest projections, use the compound interest calculator.

Results are for educational and planning purposes only and do not constitute financial advice. Always verify interest terms with your lender or financial institution.

Glossary

Interest terms defined

The cost of borrowing money or the return on saving it, calculated as a percentage of the principal over a period of time.
The original amount of money borrowed, deposited, or invested before any interest is earned or charged.
The annual percentage rate at which interest accrues. In the formula it is expressed as a decimal: 6% = 0.06.
The duration over which interest is calculated, expressed in years. A 6-month term = 0.5 years.
The yearly cost of credit including interest and fees, expressed as a simple annual percentage. Required to be disclosed on consumer loans under TILA.
The sum of the original principal and the total interest: P + I. For a borrower this is what must be repaid; for a saver it is the account balance at maturity.
About

About this interest calculator

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Questions

Frequently asked questions about the free interest calculator

An interest calculator is a free online tool that helps you calculate simple interest from principal, rate, and time. Same as simple interest calculator. It runs entirely in your browser with instant results and no sign-up.
No — actual loan terms depend on credit, income docs, and lender underwriting. Use this for planning and what-if scenarios; get a real Loan Estimate before making decisions.
When the calculator asks for them. PITI calculations include property tax, insurance, and PMI; raw P&I calculations don't.
Lenders round payment amounts and may include escrow buffers. Property tax and insurance change over time. Real payments vary 1-5% from these estimates.

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