About the Simple Interest calculator
Simple interest is charged only on the original principal, never on interest already earned. This simple interest calculator applies the classic formula I = P × r × t to any amount, rate and time period, entered in years, months or days.
It returns the interest, the total amount owed or earned, the time converted to years and the interest for a single year. The working converts the rate to a decimal and the time to years, then multiplies it all out using your numbers. Handy for short-term loans, some auto and personal loans, bonds and homework problems.
How to use it
- Enter the Principal, the amount borrowed or invested.
- Enter the Annual rate as a percentage.
- Enter the Time and choose the Time unit: years, months or days.
- Read the interest, the total amount and the interest per year.
The formula
I = P × r × t
Total = P + I
- I — simple interest
- P — principal
- r — annual rate as a decimal (5% = 0.05)
- t — time in years
Months are converted with t = months ÷ 12 and days with t = days ÷ 365.
Simple vs. compound interest
With simple interest, every year earns the same amount because the base never changes. $10,000 at 5% earns $500 a year, so after 3 years the interest is $1,500 and the total is $11,500.
With compound interest, each year’s interest is added to the balance and earns interest itself, so the yearly amount keeps growing. At 5% compounded annually, the same $10,000 would earn about $1,576 over 3 years. The gap is small over short periods and grows large over long ones.
Simple interest shows up in short-term loans, some car loans that charge interest on the outstanding principal, certificates that pay interest out rather than reinvesting it, and many classroom problems. For savings that reinvest interest, use the compound interest calculator.
Common mistakes
The most frequent slip is forgetting to convert the rate to a decimal. 5% must be entered into the formula as 0.05, not 5. The calculator takes care of that when you type 5 in the rate box.
The second is mixing time units. The rate is per year, so time must be in years too. Ninety days is 90 ÷ 365 ≈ 0.2466 years, not 90. This calculator uses a 365-day year; some lenders and money markets use 360 days, which gives slightly more interest for the same number of days.
Finally, remember that rearranging the formula answers other questions. Rate is r = I ÷ (P × t), time is t = I ÷ (P × r) and principal is P = I ÷ (r × t).
Frequently asked questions
How do you calculate simple interest?
Multiply the principal by the annual rate (as a decimal) and by the time in years. $2,000 at 6% for 2 years is 2,000 × 0.06 × 2 = $240.
How do I calculate simple interest for months?
Divide the months by 12 to get years. Choose Months as the time unit and the calculator does the conversion.
How do I calculate simple interest for days?
Divide the days by 365 and use that as the time. The calculator uses a 365-day year when you choose Days.
Is simple interest better than compound interest?
For a borrower, simple interest costs less over time. For a saver, compound interest earns more.
Last updated October 24, 2026. Results are estimates for education and planning — see our disclaimer.