Simple Interest Calculator
Choose what you want to find — interest, principal, rate or time — enter the other three, and get the answer with the I = Prt working written out. A table then sets simple interest beside compound interest on the same money, so you can see where the two part ways. Free, no sign-up.
Your numbers
Results
$675.00
Interest (I)
$5,675.00
Total amount (P + I)
3
Time in years
The working
I = P × r × t = $5,000.00 × 0.045 × 3 = $675.00
A = P + I = $5,000.00 + $675.00 = $5,675.00
Simple vs compound interest
The same principal and rate, with interest added to the balance and earning interest in the compound column.
| Years | Simple balance | Compound balance | Compound is higher by |
|---|---|---|---|
| 1 | $5,225.00 | $5,225.00 | $0.00 |
| 2 | $5,450.00 | $5,460.12 | $10.12 |
| 3 | $5,675.00 | $5,705.83 | $30.83 |
How to Use the Simple Interest Calculator
- 1. Choose what to solve for. Interest is the usual case. Switch to principal, rate or time to work backwards from the other three.
- 2. Enter the known values. Type the rate as a percentage per year (4.5 for 4.5%). Give the time in years, months or days.
- 3. Set the day count if you use days. A 365-day year is the everyday convention; some commercial loans use a 360-day year, which gives slightly more interest for the same number of days.
- 4. Read the working. The answer, the total amount P + I and each step of the arithmetic appear below the inputs.
- 5. Compare with compound interest. The table at the bottom shows both balances at the end of each year for the compounding frequency you pick.
The Simple Interest Formula
Simple interest is earned on the original amount only: I = P × r × t, where P is the principal, r the annual rate as a decimal and t the time in years. The total amount owed or earned is A = P + I = P(1 + rt). Because the interest never earns interest, a given balance grows by the same amount every year — a straight line.
| To find | Rearrange to | Needs |
|---|---|---|
| Interest I | I = P × r × t | P, r, t |
| Principal P | P = I ÷ (r × t) | I, r, t |
| Rate r | r = I ÷ (P × t) | I, P, t |
| Time t | t = I ÷ (P × r) | I, P, r |
The rate and the time must use the same unit. A rate of 4.5% per year needs t in years, so 18 months is 18 ÷ 12 = 1.5 years and 90 days is 90 ÷ 365 = 0.2466 years (or 90 ÷ 360 = 0.25 on a 360-day year). The calculator does the conversion and shows it.
Worked Example
Lend 5,000 at 4.5% per year for 3 years. Interest I = 5,000 × 0.045 × 3 = 675.00 and the total amount is 5,675.00. Working backwards: 675 ÷ (0.045 × 3) recovers the principal of 5,000, 675 ÷ (5,000 × 3) recovers the rate of 0.045, and 675 ÷ (5,000 × 0.045) recovers the 3 years.
Days matter for short terms. The interest on 1,000 at 6% for 90 days is 1,000 × 0.06 × 90 ÷ 360 = 15.00 on a 360-day year, but 14.79 on a 365-day year — the same loan, a slightly different bill, so always check which convention applies.
Simple vs Compound Interest
Compound interest adds each period's interest to the balance, so later interest is earned on earlier interest. On the 5,000 at 4.5%, simple interest gives 5,675.00 after three years. Compounded annually it is 5,705.83, and compounded monthly 5,721.24. After 10 years the gap is 7,250.00 against 7,764.85 (annual compounding), and after 30 years 11,750.00 against 18,726.59. The two are identical for exactly one compounding period, then diverge — slowly at first, then quickly.
- Simple interest is common for short-term notes and in textbook problems.
- Compound interest is how savings accounts, most investments and credit-card balances behave. The Compound Interest Calculator adds regular deposits and a chart.
- Loans with monthly payments usually accrue interest on the remaining balance, but the payment schedule needs an amortization table — use the Loan Payment Calculator.
A note on real products
This is a teaching calculator for the formula. A loan or deposit agreement sets its own day count, rounding and fees, so use the figures in your contract for any real decision. It is not financial advice.
Frequently Asked Questions
- What is the formula for simple interest?
- I = P × r × t, where P is the principal, r the annual interest rate as a decimal and t the time in years. The total amount after the term is P + I, which equals P(1 + rt).
- How do I calculate simple interest for months or days?
- Convert the time to years first. Divide months by 12. Divide days by 365, or by 360 if your lender uses a 360-day year. For 90 days at 6% on 1,000, that is 1,000 × 0.06 × 90 ÷ 365 = 14.79 (or 15.00 on a 360-day basis).
- How do I find the interest rate from the interest earned?
- Rearrange the formula to r = I ÷ (P × t). If 675 of interest was earned on 5,000 over 3 years, r = 675 ÷ (5,000 × 3) = 0.045, which is 4.5% per year. Choose Rate in the calculator to see the steps.
- 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 the interest already added, so it grows faster over time. After one period they are equal; after that, compound interest is always higher at a positive rate.
- Is a car or personal loan simple interest?
- Many installment loans accrue interest daily on the unpaid balance, which is a simple-interest method, but the payments then split between interest and principal each period. That is an amortization, not a single I = Prt calculation, so use a loan payment calculator and your lender's disclosed terms.
- Why do some lenders use a 360-day year?
- It is a long-standing convention, especially in commercial lending, that makes each day's interest P × r ÷ 360 instead of P × r ÷ 365. Over a full 365 days it charges a little more than the stated rate suggests, about 1.4% more interest.