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- Simple interest is charged only on the original amount, using I = P × r × t.
- This calculator solves for any one value: the interest, the principal, the rate or the time.
- Time can be entered in years, months or days, with a 365-day or 360-day year.
- It also shows what the same rate would earn with monthly compounding, so you can see the difference.
How to use the simple interest calculator
Choose what to calculate
Pick interest and total amount, principal, interest rate or time needed.
Enter the known values
Fill in the other fields. The rate is always a yearly rate.
Pick the time unit
Choose years, months or days. For days, the advanced section lets you choose a 365-day or 360-day year.
Read the result
See the answer, the total amount, the interest per day and the formula with your numbers.
The simple interest formula
Simple interest
I = P × r × t
A = P + I
P is the principal, r is the yearly rate as a decimal (5% = 0.05), t is the time in years and A is the total amount.
Solving for the other values
P = I ÷ (r × t)
r = I ÷ (P × t)
t = I ÷ (P × r)
Months become years by dividing by 12; days by dividing by 365 (or 360).
Simple interest examples
Example 1: interest on $10,000
You lend $10,000 at 5% simple interest for 3 years.
The interest is $500 every year, because it is always worked out on the original $10,000.
Example 2: a short loan in days
$10,000 at 5% for 90 days.
The 360-day convention gives a little more interest for the same days, which is why it matters to know which one your lender uses.
Example 3: finding the rate
You paid $2,000 interest on an $8,000 loan over 4 years. What was the simple rate?
The same idea finds the principal or the time when you know the other three values.
Simple vs compound interest
Compound interest also earns interest on past interest, so it pulls ahead over time. Here is $10,000 at 5% each way:
$10,000 at 5%: simple vs compounded monthly
Interest earned only, not the total.
For long-term savings, use the compound interest calculator.
Where simple interest is used
Personal loans between people
Family and friends often agree on a flat yearly rate on the amount lent.
Short-term business credit
Some short-term loans and invoice financing charge interest on the original amount for the days used.
Bonds and notes
Coupon payments on many bonds are simple interest on the face value, often with a 360-day year.
Car loans and schoolwork
Many US auto loans use simple daily interest on the balance, and I = Prt is a standard math class formula.
When you repay a loan in monthly installments, interest is usually worked out on the balance that is left each month, not the original amount. For those, use the loan EMI calculator or the auto loan calculator.
Simple interest calculator FAQ
What is the formula for simple interest?
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 is P + I.
How do I calculate simple interest for months?
Divide the months by 12 to get years. For example, $10,000 at 5% for 18 months is $10,000 × 0.05 × 1.5 = $750.
How do I calculate simple interest for days?
Divide the days by 365, or by 360 if the lender uses a banker’s year. 90 days at 5% on $10,000 is $123.29 with 365 days and $125.00 with 360 days.
What is the difference between simple and compound interest?
Simple interest is always based on the original principal. Compound interest adds earned interest to the balance, so later interest is larger. At 5% for 10 years on $10,000, simple earns $5,000 and monthly compounding earns $6,470.09.
How do I find the rate if I know the interest?
Use r = I ÷ (P × t). $2,000 interest on $8,000 over 4 years is 2,000 ÷ 32,000 = 0.0625, or 6.25% a year.
Is simple interest better for borrowers?
For the same rate and time, simple interest costs less than compound interest, so it is better for the borrower and worse for the saver.