Free simple interest calculator

How to use

1. Enter the principal — the amount you are lending, borrowing, or investing.
2. Enter the annual rate as a percentage.
3. Enter time in years (use decimals for partial years — 0.5 for six months).
4. The interest earned, total amount, and effective return appear instantly.

Formula

Simple interest uses a single formula:

I = P × r × t

The total amount is A = P + I.

Worked examples

$1,000 at 5% for 3 years

• I = 1,000 × 0.05 × 3 = $150
• A = 1,000 + 150 = $1,150
• Effective return = 150 ÷ 1,000 = 15%

Simple vs. compound — $10,000 at 5% for 10 years

• Simple: 10,000 × 0.05 × 10 = $5,000 of interest. Ending balance $15,000.
• Compound (annual): 10,000 × 1.05¹⁰ − 10,000 = $6,289 of interest. Ending balance $16,289.
• Compound wins by $1,289 in ten years; the gap widens exponentially beyond that.

Notes

• Where it shows up: Simple interest is the default for U.S. Treasury bills, most car loans, some personal loans, and short-term bridge financing. It’s also used inside a single compounding period of any compound loan.
• Where it doesn’t: Savings accounts, CDs, mortgages, and credit cards use compound interest. If you’re modelling a savings horizon longer than a year, use the compound-interest calculator.
• Partial years: The formula handles them — 0.25 for three months, 0.5 for six — but double-check whether your actual loan uses actual/360, 30/360, or actual/365 day count; results can differ by a few percent.