Calculator
Simple Interest Calculator
Calculate simple interest from principal, annual rate, and time. Use it when interest is charged only on the original amount, not on accumulated interest.
Result
- Interest
- $1,500.00
- Total amount
- $11,500.00
Interest generated without compounding.
How simple interest calculation works
Simple interest applies the annual rate only to the original principal. Prior interest is not added back into the balance.
The calculator multiplies principal by the annual rate and time in years, then adds the interest to principal for the total amount.
Use decimals for partial years. For example, 6 months is 0.5 years and 15 months is 1.25 years.
Useful next steps
- Use the loan payment calculator if you need a monthly payment rather than simple accrued interest.
- Compare simple interest vs loan payments to choose the right formula before estimating borrowing cost.
Simple interest formula
interest = principal * (annualRatePercent / 100) * timeYears; total = principal + interestSimple interest does not amortize payments and does not compound prior interest. It is useful only when the product actually charges interest on the original principal.
- principal is the original amount.
- annualRatePercent is the yearly simple interest rate.
- timeYears is the time period measured in years.
What the Numbers Mean
- Principal
- The original amount borrowed, invested, or used as the base for the interest calculation.
- Annual interest rate
- The yearly simple interest rate applied to the original principal.
- Time
- The length of the calculation in years. Use decimals for partial years.
- Total amount
- Principal plus simple interest generated over the time period.
Assumptions
- Interest is charged only on the original principal.
- Prior interest is not added back into the balance.
- The rate is fixed for the full time period entered.
- Fees, compounding, amortization, variable rates, and irregular payments are excluded.
- Use an amortized loan calculator when payments reduce the balance over time.
Worked Examples
Three-year note
- Input
- $12,000 principal, 5.5% annual rate, 3 years
- Output
- $1,980 interest and $13,980 total
Interest is 12,000 x 0.055 x 3.
Short-term calculation
- Input
- $2,500 principal, 4% annual rate, 0.5 years
- Output
- $50 interest and $2,550 total
Half a year at 4% simple interest produces 50 of interest.
One-year savings example
- Input
- $7,500 principal, 3.2% annual rate, 1 year
- Output
- $240 interest and $7,740 total
Simple interest for one year is principal multiplied by the annual rate.
Frequently Asked Questions
Does this compound interest?
No. Simple interest does not add prior interest back into principal.
Can I enter partial years?
Yes. Use decimals such as 0.5 for six months or 1.25 for fifteen months.
Is APR always simple interest?
No. APR, APY, fees, and compounding rules can differ by product and jurisdiction.
What is the difference between simple interest and compound interest?
Simple interest applies the rate to the original principal only. Compound interest adds interest to the balance, so future interest can be charged on prior interest.
Can this be used for loans?
Only for loans that actually use simple interest. Amortized loans, mortgages, credit cards, and many savings products require different formulas.
When should this not be used?
Do not use it for products with compounding, variable rates, amortization, fees, or irregular payment schedules.
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Disclaimer
This calculator is a simplified interest estimate and does not model compounding, fees, amortization, taxes, or legal loan terms.