Free simple interest calculator
Calculate simple interest: I = Prt — enter principal, annual rate, and time in years to see interest earned and total amount, updated live, as you type.
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Simple interest only — does not compound. I = P × r × t.
Results are estimates. Consult a professional.
How the simple interest calculator works
Simple interest is calculated only on the original principal — not on previously earned interest. The interest amount grows at a constant, linear rate: double the time and the interest doubles; double the principal and the interest doubles. There is no compounding.
Simple interest is used for short-term personal loans, Treasury bills, automobile loans, and some bonds. Because it does not accumulate interest-on-interest, borrowers typically pay less total interest than with a compound-interest loan of the same rate and term — a key reason lenders specify whether a loan uses simple or compound interest.
Worked example: $5,000 at 6% simple interest for 3 years
Taylor lends $5,000 to a family member at 6% simple interest for 3 years. No interest is added to the balance — each year's interest is calculated only on the original $5,000. The total interest owed at the end is $900, making the total repayment $5,900.
Simple interest earned at common rates and terms
The table shows the total interest earned (not total amount) on four principal amounts at four common rates over one, two, three, and five years. All values use the I = P × r × t formula.
| Principal | Rate | 1 year | 2 years | 3 years | 5 years |
|---|---|---|---|---|---|
| $1,000 | 3% | $30 | $60 | $90 | $150 |
| $1,000 | 5% | $50 | $100 | $150 | $250 |
| $1,000 | 7% | $70 | $140 | $210 | $350 |
| $1,000 | 10% | $100 | $200 | $300 | $500 |
| $5,000 | 3% | $150 | $300 | $450 | $750 |
| $5,000 | 5% | $250 | $500 | $750 | $1,250 |
| $5,000 | 7% | $350 | $700 | $1,050 | $1,750 |
| $5,000 | 10% | $500 | $1,000 | $1,500 | $2,500 |
| $10,000 | 3% | $300 | $600 | $900 | $1,500 |
| $10,000 | 5% | $500 | $1,000 | $1,500 | $2,500 |
| $10,000 | 7% | $700 | $1,400 | $2,100 | $3,500 |
| $10,000 | 10% | $1,000 | $2,000 | $3,000 | $5,000 |
| $25,000 | 3% | $750 | $1,500 | $2,250 | $3,750 |
| $25,000 | 5% | $1,250 | $2,500 | $3,750 | $6,250 |
| $25,000 | 7% | $1,750 | $3,500 | $5,250 | $8,750 |
| $25,000 | 10% | $2,500 | $5,000 | $7,500 | $12,500 |
Interest only (not total repayment). I = P × r × t. Source: Federal Reserve and CFPB simple interest definitions.
Tips for using simple interest correctly
Simple interest is intuitive but easy to misapply when loan terms don't align neatly with the formula's assumptions. These tips cover the most common situations.
- Convert months to fractional years — a 9-month loan uses t = 9/12 = 0.75. Entering the term in months without dividing by 12 is the most common calculation error.
- Verify whether your loan uses simple or compound interest — most car loans and personal instalment loans use simple interest; most credit cards and mortgages use compound interest. The loan agreement or Truth-in-Lending disclosure will state which applies.
- Pay early to reduce total interest on simple-interest loans — because interest accrues daily on the outstanding principal, paying ahead of schedule reduces the balance faster and cuts total interest owed. This does not work the same way with compound-interest products.
- Use simple interest for T-bill and short-term bond calculations — U.S. Treasury bills are quoted on a simple-interest basis using a 360-day year (bank discount yield), so this formula applies directly when adjusted for the day-count convention.
- Compare simple vs compound carefully before borrowing — at short terms and modest rates the difference is small, but over years it grows. Run both calculations when evaluating offers to know the true cost difference.
Accuracy and limitations
This calculator applies the exact simple interest formula I = P × r × t. It assumes a fixed rate for the full term and that interest is not added to the principal at any point. It does not account for compounding, fees, taxes, day-count conventions (such as the 360-day bank year used for T-bills), or payment schedules that reduce the outstanding principal over time (as in an amortising loan, where interest recalculates on the declining balance).
Results are for educational and planning purposes only and do not constitute financial advice. Consult a qualified financial adviser or lender for loan-specific calculations.
Simple interest terms defined
About this simple interest calculator
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