Simple Interest Calculator
Calculate simple interest and total amount. Enter principal, annual rate, and time to see how much interest you'll earn or owe.
How to Calculate Simple Interest
Total Amount = P + I
Where: P = Principal, R = Annual rate (as decimal), T = Time in years.
Principal = $10,000, Rate = 5%, Time = 3 years
Interest = $10,000 × 0.05 × 3 = $1,500
Total Amount = $10,000 + $1,500 = $11,500
Simple vs. Compound Interest
Simple interest is calculated only on the original principal. Compound interest is calculated on principal plus accumulated interest. Over time, compound interest grows exponentially faster. Use our Compound Interest Calculator to compare.
FAQ
Where is simple interest used?
Simple interest is common in short-term loans, car loans, and some personal loans. Savings accounts and most long-term investments use compound interest.
How do I convert months to years?
Divide months by 12. For example, 18 months = 18/12 = 1.5 years. Enter 1.5 in the time field.
Does the rate need to match the time period?
Yes. If you enter an annual rate, time should be in years. If you enter a monthly rate, time should be in months.
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Last updated: 2026-08-08