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Free Simple Interest Calculator

Calculate simple interest — interest charged only on the original principal — and the total amount owed or earned.

Result
Interest
150.00
Final amount
1,150.00

Simple interest only (no compounding). Estimate for information.

Growth over time

05001k1.5k2k0123Year
PrincipalInterestY-axis = balance, starting at 0.

Year-by-year breakdown

YearInterestBalance
150.001,050.00
250.001,100.00
350.001,150.00

Estimate only. This calculator provides estimates based on the values you enter and the formula shown. It is not financial advice and may not reflect every fee, tax, or lender requirement. Check figures with a qualified professional before making financial decisions.

Quick answer

Simple interest is calculated only on the original principal, using I = P × r × t, where P is the principal, r is the annual rate as a decimal, and t is the time in years. The final amount is the principal plus the interest, A = P + I.

Formula & method

I = P × r × t;   A = P + I
  • I — interest
  • P — principal (starting amount)
  • r — annual rate as a decimal (5% = 0.05)
  • t — time in years
  • A — final amount

Unlike compound interest, simple interest does not earn interest on previous interest.

Examples

Example 1: $1,000 at 5% for 3 years
Input
P = 1000, r = 5%, t = 3
Result
Interest $150, total $1,150
Why
1000 × 0.05 × 3 = 150.
Example 2: $2,500 at 4% for 6 months
Input
P = 2500, r = 4%, t = 0.5
Result
Interest $50, total $2,550
Why
2500 × 0.04 × 0.5 = 50.
Example 3: $800 at 10% for 2 years
Input
P = 800, r = 10%, t = 2
Result
Interest $160, total $960
Why
800 × 0.10 × 2 = 160.

When to use this tool

  • Estimating interest on a short-term loan that uses simple interest.
  • Checking interest on a bond or note quoted as simple interest.
  • Comparing simple versus compound growth for the same inputs.

Common mistakes

  • Entering the rate as a whole number in the formula. In the tool use 5 for 5%; in the formula r is 0.05.
  • Using months for time without converting to years (6 months = 0.5 years).
  • Confusing simple with compound interest — simple interest never compounds.

Frequently asked questions

What is simple interest?

Interest calculated only on the original principal, not on accumulated interest. It grows in a straight line over time.

How is it different from compound interest?

Compound interest is calculated on the principal plus previously earned interest, so it grows faster. Simple interest ignores prior interest.

How do I handle months?

Convert months to years. For example, 9 months is 0.75 years.

What is the formula?

I = P × r × t for the interest, and A = P + I for the final amount, where r is the annual rate as a decimal and t is years.

Is this financial advice?

No. It’s an educational estimate based on the numbers you enter.

Is simple interest used in real financial products?

Yes. Some short-term loans, bonds, and Treasury notes use simple interest. Most savings accounts and mortgages use compound interest (which grows faster). Check your account terms.

How do I calculate simple interest on a loan if I make extra payments?

This tool assumes you don't make extra payments. If you do, the interest owed decreases. Contact your lender for an updated payoff calculation.

Sources & references

External references open in a new tab. We are independent and not affiliated with these organizations.

Disclaimer

This calculator provides estimates based on the values you enter and the formula shown. It is not financial advice and may not reflect every fee, tax, or lender requirement. Check figures with a qualified professional before making financial decisions.

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  • ✓ Formula and method shown above
Last updated: How we calculateReport a correctionDisclaimer

Provided “as is” for general information only — results may be inaccurate, so verify before you rely on them. No warranty; use at your own risk.

Built and reviewed by HIFreeTools against the formula shown above and any authoritative references cited on this page. See our methodology and editorial standards.

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