About the Simple Interest Calculator
This simple interest calculator solves the classic formula I = P × r × t. Choose what you want to find — the interest, the principal, the rate or the time — enter the other values, and it returns the answer along with the total amount (principal plus interest). Time can be entered in years, months or days.
Simple interest is charged only on the original principal, never on previously earned interest. It is used for many short-term loans, some auto loans, promissory notes and short-term money-market quotes, and it is the first interest formula taught in school, so this tool is handy for students checking homework as well as borrowers and lenders.
For day-based periods the calculator uses a 365-day year, which is common in consumer lending; some commercial and money-market contracts use 360 days instead, which slightly increases the interest. The chart compares simple interest with annual compound interest at the same rate.
How to use the simple interest calculator
- 1Choose what you want to solve for: interest, principal, rate or time.
- 2Enter the values you know; the unknown field is hidden.
- 3Pick whether time is in years, months or days.
- 4Read the answer and the total amount, and compare with compound interest.
Formula and method
Simple interest I equals the principal P multiplied by the annual rate r (as a decimal) and the time t in years. The total amount A repaid or received is the principal plus that interest. Rearranging the same equation gives P = I ÷ (r t), r = I ÷ (P t) and t = I ÷ (P r), which is how the calculator solves for any missing value.
Months are converted to years by dividing by 12 and days by dividing by 365. Because interest is never added to the principal, the balance grows in a straight line; compound interest, shown for comparison, earns interest on interest and grows faster over longer periods.
- I
- Interest earned or owed
- P
- Principal (amount borrowed or invested)
- r
- Annual interest rate as a decimal (5% = 0.05)
- t
- Time in years
- A
- Total amount (principal + interest)
Worked examples
$10,000 at 5% for 3 years
I = 10,000 × 0.05 × 3 = $1,500, so the total is $11,500. Compounded annually, the same deposit would earn about $1,576.25.
Find the rate: $8,000 earned $1,200 in 4 years
r = I ÷ (P × t) = 1,200 ÷ (8,000 × 4) = 0.0375, a simple rate of 3.75% a year.
90-day loan of $25,000 at 8%
90 days is 90 ÷ 365 = 0.2466 years, so I = 25,000 × 0.08 × 0.2466 ≈ $493.15. On a 360-day basis it would be $500.
Find the principal: $600 interest at 4% over 2 years
P = I ÷ (r × t) = 600 ÷ (0.04 × 2) = $7,500 needs to be invested to earn $600 of simple interest in two years.
Frequently asked questions
What is the simple interest formula?+
Simple interest is I = P × r × t: principal times the annual rate (as a decimal) times the time in years. For example, $2,000 at 6% for 2 years earns 2,000 × 0.06 × 2 = $240.
What is the difference between simple and compound interest?+
Simple interest is calculated only on the original principal. Compound interest is calculated on the principal plus interest already earned, so it grows faster the longer money is left and the more often it compounds.
Which loans use simple interest?+
Many auto loans, personal loans and some mortgages accrue simple interest daily on the outstanding balance. Short-term promissory notes and bridge loans are also commonly quoted with simple interest, and Treasury bill discount yields use the same no-compounding idea.
How do I calculate simple interest for months or days?+
Convert the time to years first: divide months by 12 or days by 365 (or 360 if the contract uses a banker’s year). Then apply I = P × r × t. The time-unit option above does this conversion for you.
How do I find the rate from the interest?+
Rearrange the formula: r = I ÷ (P × t). If $5,000 earns $450 over 3 years, the rate is 450 ÷ (5,000 × 3) = 0.03, or 3% per year.