Free Online Simple Interest Calculator

About Simple Interest Calculator

Simple interest is the most straightforward way interest is calculated on a loan or deposit — interest accrues only on the original principal amount, at a fixed rate, for a set period of time, with no compounding along the way. It's used for many short-term loans, some auto loans, certain bonds, and basic savings calculations where the math intentionally stays simple rather than compounding.

The formula is principal × rate × time, divided by 100 when the rate is expressed as a percentage — straightforward, but easy to fumble when time isn't a whole number of years, or when comparing multiple loan or deposit offers with different rates and terms. This tool takes the principal, annual interest rate, and time period in years and calculates the exact interest earned or owed, plus the total amount (principal plus interest).

The key thing that distinguishes simple interest from compound interest is that the interest itself never earns additional interest — a $1,000 principal at 5% for 3 years always earns exactly $150 in interest total, evenly $50 per year, regardless of how the calculation is broken down. Compound interest, calculated by the separate Compound Interest Calculator, would produce a higher total because each period's interest gets added back into the principal before the next period's interest is calculated.

This tool is useful for quickly checking a lender's stated interest figure on a simple-interest loan, comparing offers, or working through basic finance coursework where simple interest is typically taught before compound interest as the foundational concept.

How it works

1. Enter the principal amount. The original amount being loaned, borrowed, or deposited.
2. Enter the annual interest rate. As a percentage, e.g. 5 for 5%.
3. Enter the time period. In years — decimal values like 2.5 are supported.