Simple Interest Calculator

Enter a principal amount, annual interest rate, and time period to instantly calculate simple interest and the total amount owed or earned.

Currency

Principal amount

Annual interest rate

% / year

Time period

Interest earned

$150.00

Principal

$1,000.00

Total amount

$1,150.00

Formula: I = P × R × T ÷ 100 = $1,000 × 5% × 3 years ÷ 100 = $150.00

How to use the Simple Interest Calculator

Enter the principal amount
Type the starting amount — the amount borrowed, deposited, or invested. Select your preferred currency using the buttons at the top.
Enter the annual interest rate
Type the interest rate as a percentage per year. For example, enter 5 for a 5% annual rate.
Set the time period
Enter the length of time and choose whether you're entering years or months. For a 2-year loan, enter 2 and select Years. For an 18-month period, enter 18 and select Months.
Read your results
The calculator instantly shows the interest earned or owed, your original principal, and the total amount (principal + interest). The formula used is shown below the results.

About this Simple Interest Calculator

Simple interest is the most straightforward way to calculate the cost of borrowing or the return on a deposit. Unlike compound interest, simple interest is always calculated on the original principal — it never compounds on previously earned interest. The formula is: Interest = Principal × Rate × Time ÷ 100.

For example, if you deposit £5,000 at a 4% annual rate for 3 years, the interest is £5,000 × 4 × 3 ÷ 100 = £600, making the total £5,600. With compound interest, the total would be slightly higher because interest is added to the principal each period.

Simple interest is commonly used for short-term personal loans, car finance, some savings accounts, and US Treasury bills. It's also the basis for most consumer lending calculations in many countries. When comparing loan offers, it's important to understand whether the quoted rate uses simple or compound interest — a 10% simple interest rate and a 10% compound rate result in very different total costs over a multi-year period.

The simple interest formula is also useful for back-of-the-envelope calculations: to check whether a quoted monthly repayment is reasonable, or to estimate interest costs on a short-term facility before getting a formal quote.

Frequently Asked Questions

Simple interest = (Principal × Rate × Time) ÷ 100. For example, £2,000 at 5% for 3 years earns £300 in interest: (2000 × 5 × 3) ÷ 100 = £300.

Simple interest is always calculated on the original principal. Compound interest is calculated on the principal plus any previously earned interest, so the balance grows faster over time. For the same rate and term, compound interest always produces a higher total than simple interest.

Simple interest is commonly used for short-term personal loans, auto loans, some savings accounts, and US Treasury bills. It's also used in consumer lending where interest is charged on the outstanding balance rather than compounding monthly.

Divide the annual rate by 12 to get the monthly rate. For a 6% annual rate, the monthly simple interest rate is 0.5%. Alternatively, use our calculator and select 'Months' as the time period.

In our calculator, no — simple interest is always a positive amount based on the inputs. In financial markets, negative interest rates do exist (meaning depositors pay the bank), but that's a macroeconomic scenario beyond the scope of this tool.