Simple Interest Calculator
Calculate simple interest the textbook way — interest on the principal only — or flip the toggle to solve the same equation for the principal, rate, or time you'd need. Every answer shows its worked formula, the interest per day and per month, and the annual-compounding equivalent for contrast. All in your browser.
Simple interest is charged only on the original principal — the interest never earns interest. It's used for some auto loans, short-term and personal loans, and many bonds' coupon math. Most savings and credit cards use compound interest instead, which is why the annual-compounding figure pulls ahead the longer the term runs.
Interest on the principal, and only the principal
Simple interest is the most straightforward kind: a fixed percentage of
the original principal, charged each period, that never earns interest
itself. The formula I = P × r × t is exactly that — the
same dollar amount every year. It's predictable and easy to reason
about, which is why it shows up in loan contracts and bond coupons.
Why compound eventually wins
For one year, simple and compound interest produce the same number. But compound interest adds each period's interest to the balance, so the next period earns a little more — and that gap grows every year. The "compounding earns extra" figure in the results is small over short terms and dramatic over long ones. If you're saving or investing, that difference is the whole reason to start early; if you're borrowing, simple interest is the friendlier of the two.
Related
- Personal finance hub — all our money calculators and guides
- Compound interest calculator — interest on interest
- Loan calculator — amortized loan payments
- APY calculator — how compounding frequency affects yield
FAQ
Is anything I enter sent to a server?
No. The calculator runs entirely in your browser — open DevTools → Network and confirm. Nothing you type is uploaded.
What is the simple interest formula?
I = P × r × t — interest equals principal times the annual rate times the time in years. $5,000 at 6% for 5 years earns 5000 × 0.06 × 5 = $1,500, for a total of $6,500. The rate applies only to the original principal, the same amount every year.
Can it solve for the rate, time, or principal instead?
Yes — that's the solve for toggle. The same equation rearranges for any unknown: principal needed is P = FV ÷ (1 + r·t), rate needed is r = (FV/P − 1) ÷ t, and time needed is t = (FV/P − 1) ÷ r, where FV is the end balance you enter. So you can answer questions like "what rate turns $5,000 into $6,500 in 5 years?" (6%) without algebra. The worked-formula line under the result shows the exact arithmetic for whichever mode you're in.
How is simple interest different from compound interest?
Simple interest is charged only on the principal, so the interest is the same each year and never earns interest itself. Compound interest is charged on the principal plus previously accrued interest, so it snowballs. Over one year they're identical; over many years compound pulls far ahead. The calculator shows both so you can see the gap widen with time.
Where is simple interest actually used?
More places than you'd think: many auto loans and short-term personal loans use simple interest (often calculated daily on the balance), most bonds pay simple-interest coupons, and some mortgages and student loans accrue simple interest. Savings accounts, credit cards, and investments, by contrast, almost always compound.
Is simple interest better for a borrower or a saver?
As a borrower, simple interest is better than compound — you never pay interest on interest. As a saver or investor, you want compound — your money earns on its earnings. The same mechanism that helps you when saving works against you when borrowing.