Simple Interest Calculator

Simple interest is interest paid only on the original amount, the principal, never on interest already earned:

Interest = Principal * Rate * Time

with the rate as a decimal per year (5% is 0.05) and the time in years. The final value is the principal plus the interest. Enter the initial amount, the yearly interest rate in percent and the period in years, and the calculator shows both.

Example

$1,000 at 5% a year for 3 years:

1. Interest:

   1,000 * 0.05 * 3 = 150.00

2. Final value:

   1,000 + 150 = 1,150.00

For a period in months, enter it as a fraction of a year: 6 months is 0.5.

Simple and compound interest

With simple interest, the interest is the same every year. With compound interest, each year's interest is added to the balance and earns interest itself, so the amount grows faster. For the example above, compounding yearly gives $1,157.63 instead of $1,150, and the gap widens with time. See the Compound Interest Calculator.

Frequently asked questions

How do I find the rate or the time?

Rearrange the formula: Rate = Interest / (Principal * Time), and Time = Interest / (Principal * Rate). To earn $5,250 in 3 years at 15%, you would need 5,250 / (0.15 * 3) = 11,666.67.

Where is simple interest used?

In some car loans, short-term personal loans, bonds' coupons and treasury bills, and in many school exercises. Savings accounts and most loans compound.