1. Annual savings interest
A $5,000 deposit earns 4% simple interest for 3 years.
- Convert the rate: 4% ÷ 100 = 0.04.
- Time is already annual: 3 years.
- Substitute: I = $5,000 × 0.04 × 3 = $600.
- Final amount: A = $5,000 + $600 = $5,600.
Simple Interest Calculator
I = P × r × t • A = P(1 + rt)
Calculate simple interest for a loan, deposit, or investment using principal, annual rate, and time. Results assume no compounding and no change to the original principal during the term.
Enter your values
Results
Enter the known values and select Calculate. Your answer, conversions, equation, steps, and optional schedule will appear here.
Simple interest
Final balance
Interest per year
Interest per month
Time used
Calculated value
Substituted equation
Calculation steps
Linear balance schedule
| Period | Elapsed time | Interest | Balance |
|---|
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Simple Interest Formulas
Simple interest grows in a straight line because each period’s interest is based on the same original principal. The calculator uses the following equivalent notations:
- Decimal-rate notation: \(I = P \times r \times t\), where \(r\) is a decimal such as 0.05.
- Percentage-rate notation: \(SI = P \times R \times T / 100\), where \(R\) is entered as a percentage such as 5.
- Final amount: \(A = P + I = P(1 + rt)\).
P is principal, I or SI is simple interest, r is the rate as a decimal, R is the rate as a percentage, t or T is time, and A is the principal plus interest.
Rearranged equations
- Principal: \(P = I / (r \times t)\)
- Annual rate as a decimal: \(r = I / (P \times t)\), then multiply by 100 for a percentage
- Time: \(t = I / (P \times r)\)
Match the rate and time periods. This page treats the rate as annual, so it converts months ÷ 12, quarters ÷ 4, weeks ÷ 52, and days ÷ the selected 360 or 365 day year before applying the formula.
How to use the calculator
- Choose whether to calculate interest, final amount, principal, rate, or time.
- Enter every value marked as required.
- Choose the time unit; for days, choose the convention specified by the agreement.
- Select Calculate to see the answer, conversion, substituted equation, and steps.
- Keep the schedule option selected to compare the linear balance by period.
Worked Examples
2. An 18-month short-term loan
A $10,000 loan uses a 6% annual simple rate for 18 months.
- Convert the rate: 6% ÷ 100 = 0.06.
- Convert time: 18 ÷ 12 = 1.5 years.
- Substitute: I = $10,000 × 0.06 × 1.5 = $900.
- Final amount: A = $10,000 + $900 = $10,900.
3. Day-based calculation
A $2,500 principal uses an 8% annual simple rate for 90 days on a 365-day convention.
- Convert the rate: 8% ÷ 100 = 0.08.
- Convert time: 90 ÷ 365 = 0.246575 years.
- Substitute: I = $2,500 × 0.08 × 0.246575 = $49.3151, rounded to $49.32.
- Final amount: A = $2,500 + $49.32 = $2,549.32.
How rate and term change the result
For a constant $1,000 principal, simple interest changes proportionally with either rate or time.
| Annual rate | Term | Interest | Final amount |
|---|---|---|---|
| 5% | 1 year | $50 | $1,050 |
| 5% | 2 years | $100 | $1,100 |
| 7% | 2 years | $140 | $1,140 |
Assumptions and Financial Limits
This tool models interest on an unchanged original principal. It does not model repayments, fees, new deposits, withdrawals, compounding, APY, changing rates, or an amortization schedule.
A product described as a “simple interest” auto or repayment loan may still calculate interest on its declining outstanding balance each day or month. Because payments reduce that balance, this page’s final amount is not a repayment quote. The Consumer Financial Protection Bureau explains this distinction for simple-interest auto loans.
Simple Interest: FAQ
How do I calculate simple interest monthly?
Enter the number of months and choose Months. The calculator divides months by 12 so the time period matches the annual rate; for example, 18 months becomes 1.5 years.
How do I calculate simple interest for a number of days?
Choose Days, enter the day count, then select the 365-day or 360-day convention required by your agreement. The calculator divides days by that selected year length and shows the conversion in the result.
Should I use 360 or 365 days?
Use the convention stated in the account, note, or contract. A 360-day year produces slightly more interest than a 365-day year for the same principal, annual rate, and number of days.
How can I find a missing principal, rate, or time?
Choose the missing value in Calculate. The tool rearranges I = P × r × t as P = I ÷ (r × t), r = I ÷ (P × t), or t = I ÷ (P × r).
Is a simple interest rate the same as APR or APY?
No. APR can include certain loan fees in addition to interest, while APY reflects the relationship between deposit interest and principal and can reflect compounding. This calculator uses only the annual rate you enter.
Do payments reduce this result?
No. This model keeps the original principal unchanged for the whole term. It does not apply payments or calculate interest on a declining outstanding balance.
Why might a bank or lender show a different result?
A provider may use exact dates, a different day-count convention, rounding rules, changing balances, fees, repayments, compounding, or product-specific terms. Use the provider’s agreement and disclosures for an actual quote.
Simple Interest vs Compound Interest
| Feature | Simple interest | Compound interest |
|---|---|---|
| Interest base | Unchanged original principal | Principal plus previously added interest |
| Growth pattern | Linear | Exponential when the rate and periods are positive |
| Use this page when | The agreement or exercise specifies simple interest on a fixed principal | Not applicable; use a compound interest calculator |
| Typical formula | I = P × r × t | A = P(1 + r/n)nt |
When to use each calculation
Use simple interest for classroom problems and fixed-principal estimates that explicitly specify simple interest. Use compound interest when earned or charged interest is added to the balance. For repayment loans with changing balances, use a product-specific repayment or amortization calculator.
Common mistakes
- Entering 0.05 in a percentage field instead of 5.
- Using months directly with an annual rate instead of dividing by 12.
- Assuming APR, APY, and a stated interest rate are interchangeable.
- Treating a fixed-principal estimate as a loan repayment schedule.
- Choosing 360 or 365 days without checking the applicable agreement.
Glossary
- Principal (P)
- The original amount borrowed, deposited, or invested.
- Rate (r or R)
- The interest rate for a stated period; here it is annual. Lowercase r denotes a decimal and uppercase R denotes a percentage.
- Term (t or T)
- The length of time that interest applies, converted here to years.
- Interest (I or SI)
- The amount earned or charged on the unchanged principal.
- Final amount (A)
- The original principal plus simple interest.
Methodology and Review
Method: The calculator converts the entered annual percentage to a decimal, converts time to years, and applies I = P × r × t. Reverse modes use the algebraically rearranged equations shown above. Currency results are rounded for display to two decimal places, while calculations retain full JavaScript numeric precision.
Calculation assumptions: The principal and annual rate remain unchanged, interest does not compound, and no cash flows occur during the term. The schedule is an explanatory linear projection, not an amortization schedule.
Last reviewed: 16 July 2026 for formula accuracy, assumptions, validation, and interaction behavior.
Sources: Consumer Financial Protection Bureau guidance on interest rates versus APR, outstanding-balance simple-interest auto loans, and APY calculations and terminology.
Financial-information disclaimer: This calculator is for general educational estimates, not financial, lending, tax, or legal advice. Product terms and provider calculations control; verify decisions with the relevant institution or a qualified professional.