Simple Interest Calculator
Calculate simple interest with I = P·r·t.
Interest without compounding
Simple interest is principal times rate times time, with no compounding: $1,000 at 5% for three years earns $150. It is common for short-term loans and some bonds.
It is the right model for many short-term personal loans and some bonds, where interest does not compound — useful to compare against a compound offer to see which truly costs less.
Simple vs compound
Over long periods compounding earns far more, so check which your account uses. The figures you enter never leave your device.
Frequently asked questions
What is the simple interest formula?
I = P × r × t: principal times annual rate times years. $5,000 at 6% for 4 years earns $1,200, for a final amount of $6,200.
How is simple interest different from compound interest?
Simple interest is only ever charged on the original principal. Compound interest also earns on previous interest, so it grows faster over time.
Where is simple interest actually used?
Many car loans, short-term personal loans, and some bonds use simple interest on the principal. Savings accounts and credit cards almost always compound.
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