Simple Interest Calculator

Simple interest is calculated using the formula I = P x R x T, where P is the principal amount, R is the annual interest rate expressed as a decimal, and T is the time period in years. For example, $5,000 at 4% for 3 years yields $600 in interest. To find the total balance, add the interest back to the principal: A = P + I.

At 6% simple interest, $10,000 earns $600 in interest per year (10,000 x 0.06 x 1). Over 5 years that grows to $3,000 in total interest, giving you an end balance of $13,000. Simple interest does not compound, so the interest amount stays the same each year regardless of accumulated interest.

Using I = P x R x T: $1,000 x 0.05 x 3 = $150 in total simple interest. Your end balance after 3 years would be $1,150. Because simple interest only applies to the original principal, the interest earned each year is a flat $50.

Multiply your principal by the annual interest rate (as a decimal) and then multiply by 2 for the time period: I = P x R x 2. For instance, $2,000 at 7% over 2 years equals $2,000 x 0.07 x 2 = $280 in interest, for a total balance of $2,280. The same rate is applied to the original principal each year with no compounding.

Simple interest is calculated only on the original principal for every period, keeping interest charges or earnings flat and predictable. Compound interest is calculated on both the principal and any previously accumulated interest, causing balances to grow exponentially over time. Borrowers generally prefer simple interest loans while savers often benefit more from compound interest accounts.

Yes — a simple interest calculator works for personal loans, auto loans, and short-term financing products where interest accrues only on the outstanding principal rather than on prior interest. Enter the loan principal, the annual interest rate, and the loan term to see total interest due and total repayment cost. Some lenders also calculate simple daily interest, which divides the annual rate by 365 to find per-day accrual.

Rearrange the formula I = P x R x T to solve for the unknown variable: P = I / (R x T) to find principal, R = I / (P x T) to find the rate, and T = I / (P x R) to find the time. Our calculator handles all four variables — enter any three known values and it instantly solves for the fourth, making it useful for both savings and loan planning scenarios.