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Simple Calculators

Simple Interest Calculator

Calculate simple interest using SI = P × r × t for any time period in years, months, or days

$
% a year

Simple interest is charged on the original principal only: SI = P × r × t.

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Quick summary

Simple interest is calculated only on the original principal using the formula SI = P × r × t. Unlike compound interest, simple interest does not earn interest on previously accumulated interest. It is commonly used in short-term loans and some consumer finance products.

Reviewed by Simple Calculators TeamLast reviewed

For planning only — not financial or tax advice. Results are estimates based on your inputs and the stated assumptions. Confirm important decisions with a qualified professional.

How to use this calculator

  1. Enter the inputs requested by the calculator.
  2. Choose the units or options that match your situation and review the assumptions.
  3. Run or update the calculation to see the result.
  4. Review the result, breakdown, and formulas shown on the page.
  5. Check the inputs, units, dates, and limitations before saving or sharing the result.

Simple Interest Formula & Examples

Simple Interest Formula

SI=P×r×tSI = P \times r \times t
SI
Simple interest earned
P
Principal (initial amount)
r
Annual interest rate as a decimal (e.g. 5% = 0.05)
t
Time in years

Worked example

Calculate simple interest on $5,000 at 6% per year for 3 years

Given
P = $5,000
r = 0.06
t = 3 years
Calculation
SI=5000×0.06×3SI = 5000 \times 0.06 \times 3
Result
SI = $900

Total Amount

A=P+SI=P(1+rt)A = P + SI = P(1 + rt)
A
Total amount (principal + interest)
P
Principal
r
Annual rate (decimal)
t
Time in years

Worked example

Total amount after earning $900 in interest on $5,000

Given
P = $5,000
SI = $900
Calculation
A=5000+900A = 5000 + 900
Result
A = $5,900

Frequently asked questions

What is the difference between simple and compound interest?

Simple interest is calculated only on the principal each period. Compound interest is calculated on the principal plus all previously earned interest. Over time, compound interest grows significantly faster.

How do I convert months to years for simple interest?

Divide the number of months by 12. For example, 18 months = 18 ÷ 12 = 1.5 years. This calculator handles the conversion automatically.

What types of loans use simple interest?

Many auto loans, short-term personal loans, and US savings bonds use simple interest. Mortgages and most savings accounts use compound interest.

Can simple interest be charged daily?

Yes. Daily simple interest means interest accrues each day on the current outstanding principal balance. Most auto loans in the US use daily simple interest, which is why making payments early saves money.

Key terms

Principal (P)
The original amount of money borrowed or invested, before any interest.
Rate (r)
The annual interest rate expressed as a decimal (e.g., 5% = 0.05).
Time (t)
The duration of the loan or investment, typically expressed in years.
Simple Interest
Interest calculated only on the original principal for each period, without compounding.

Methodology, sources & limitations

This page shows the formula, assumptions, and limitations used for this estimate. Rates, thresholds, and other time-sensitive inputs can change, so verify them against the relevant official source before relying on a result.

For our review approach and the primary sources we consult, see the methodology and source policy. If you spot an outdated figure or formula, please contact us with a correction.