Simple Interest Calculator

Work out simple interest on a loan or deposit. Enter the principal, the yearly rate and the time, and see the interest and total, with a comparison to compound interest.

Interest
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Total amount–
Interest per year–
If compounded monthly–

The simple interest formula

I = P × r × t   ·   Total = P + I

P is the principal, r the annual rate as a decimal (4% = 0.04) and t the time in years. Because interest is only ever paid on P, the same amount of interest is added every year.

Worked example

You lend $5,000 at 4% simple interest for 3 years. The interest is 5,000 × 0.04 × 3 = $600, so you are repaid $5,600. That is $200 of interest each year.

If the same deposit earned 4% compounded monthly instead, it would grow to about $5,636.36, earning $36.36 more because interest also earns interest.

Converting time to years

  • Months: divide by 12. 9 months = 0.75 years.
  • Days: divide by 365 (some lenders use 360). 120 days ≈ 0.329 years.

Solving for other values

You can rearrange the formula to find any missing piece:

  • Rate: r = I ÷ (P × t)
  • Time: t = I ÷ (P × r)
  • Principal: P = I ÷ (r × t)

Want to see interest on interest? Try the compound interest calculator.

Last reviewed October 2026.

Frequently asked questions

What is simple interest?

Simple interest is charged or earned only on the original amount, called the principal. It does not add interest on top of earlier interest, so it grows in a straight line over time.

What is the simple interest formula?

I = P × r × t, where P is the principal, r is the yearly rate as a decimal and t is the time in years. The total amount at the end is P + I.

How do I use months or days instead of years?

Convert the time into years. 18 months is 1.5 years and 90 days is about 90 ÷ 365 = 0.2466 years. The calculator lets you pick months or days and converts for you.

Is simple interest better than compound interest?

When you borrow, simple interest costs less because interest is never charged on interest. When you save or invest, compound interest earns more. Over short periods the difference is small; over many years it can be large.

Where is simple interest used?

It is common for many auto loans, some personal loans, short-term notes and certain bonds that pay a fixed coupon. Credit cards and savings accounts usually use compound interest instead.