How to use the simple interest calculator
Enter the original principal, annual simple interest rate, and time in years. The calculator applies the rate only to the original principal for the full period.
Simple interest formula
Simple interest does not add earned or charged interest to the principal for future interest calculations. That is the key difference from compound interest.
Example: Leah calculates three years of interest
Leah places $10,000 at an illustrative 5% simple annual rate for three years. Interest is $10,000 × 0.05 × 3 = $1,500, giving an ending total of $11,500.
The second and third years each add the same $500 because this model does not earn interest on earlier interest. A compounding account follows a different formula.
Convert months to years before entering time
Six months is 0.5 years, and 18 months is 1.5 years. At 5% a year, $10,000 earns $250 of simple interest over six months.
The model does not compound interest or reduce principal through repayments. Use the Loan Calculator for an installment loan with a payment schedule.
Assumptions and limitations
What the estimate assumes
Payment schedules, fees, and compounding are not included.
Simple Interest Calculator FAQs
What is simple interest?
Simple interest is calculated from the original principal for each period rather than from a balance that includes prior interest.
How is simple interest different from compound interest?
Compound interest can earn or charge interest on previously accumulated interest. Simple interest does not.
Can I enter part of a year?
Yes. For example, 1.5 years represents one year and six months.
Does the calculator include payments?
No. It calculates a simple principal-rate-time relationship.
For educational use. Actual accounts and loans can use different day-count conventions, payment timing, and compounding rules.