Simple Interest Calculator

How Simple Interest Works

Simple interest is the most basic form of interest. It is calculated only on the original principal — it does not compound.

The formula

Interest = Principal × Rate × Time

Total = Principal + Interest

Rate is the annual interest rate as a percentage. Time is in years.

Step-by-step

1. Enter the principal (the amount borrowed or invested).
2. Enter the annual interest rate as a percentage (e.g., 5 for 5%).
3. Enter the time period in years.
4. The calculator shows the interest earned or paid, plus the total balance.

Worked example

,000 at 5% annual rate for 3 years. Interest = ,000 × 0.05 × 3 = 0. Total = ,150.

Simple vs compound interest

Simple interest always grows linearly. Compound interest grows faster because it earns interest on interest. Most savings accounts use compound interest; many short-term loans and bonds use simple interest.