Simple Interest Calculator

Simple interest means interest is calculated only on the principal. Unlike compound interest, no interest accrues on previously earned interest, so the interest added each year stays the same even over a long period.

With the simple interest calculator, knowing only the principal, annual rate, and deposit period lets you quickly see the total amount at maturity. Mainly used to calculate interest on savings products or personal loans.

For example, depositing $10,000 at 5% simple interest for 3 years earns $500 per year — $1,500 in total — so you receive $11,500 at maturity.

Simple Interest Calculator Calculation Method

PV: principal, r: annual rate, t: period (years)

The maturity amount is $0.

About This Calculator

Simple interest is interest paid only on the principal you deposited or borrowed — never on interest that has already accrued. It is the standard method for short-term loans, some savings products and most textbook finance problems.

Enter the principal, the annual interest rate and the term in years to get the yearly interest, the total interest and the maturity amount at a glance.

Simple interest pays only on the original principal, so it grows in a straight line: 1,000 at 5 % earns 50 every year and 500 over ten years, compared with 629 from annual compounding. A multi-year product quoting simple interest therefore pays noticeably less than a compounded product with the same headline rate.

Key Formula:Interest = P × r × t (Maturity = P + Interest)

Frequently Asked Questions

When is simple interest used instead of compound interest?

Simple interest is common for short-term loans, car loans in some markets, and bonds that pay a fixed coupon. It is also the default in school math because the arithmetic is easier to follow.

How do I calculate simple interest for months instead of years?

Convert the term to years first: divide the number of months by 12, or the number of days by 365, and enter that value as the period. Six months becomes 0.5 years and three months becomes 0.25 years.

Where is simple interest still used?

Short-term instruments, promissory notes and flat-rate car loans. Korean flat-rate auto finance quotes simple interest on the full principal for the whole term, which makes the effective annual rate roughly 1.8 times the quoted rate.

How do I convert simple interest into an effective annual rate?

For one year the two are identical. For longer terms use (1 + r × t)^(1/t) − 1: five years at 5 % returns 25 % in total, which is 4.56 % a year compounded.

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Sources & last update

2026-10-19