Home › Financial Calculators › Simple Interest Calculator
Calculate interest earned or owed when it is charged only on the original amount.
How the calculation works
Simple interest never compounds. Interest is the principal multiplied by the yearly rate and the number of years.
Formula used
Interest = P × r × t, where r is the annual rate as a decimal and t is time in years
Example
$10,000 at 5% for 3 years earns $1,500 of interest, for a total of $11,500.
Frequently asked questions
How is it different from compound interest?
Compound interest earns interest on previous interest. Simple interest does not.
Where is simple interest used?
Some short-term loans, bonds and car loans use it.
Related calculators
Results are estimates for general information only and are not professional financial, medical or legal advice.