Simple Interest Calculator
Simple interest is charged only on the original principal, never on accumulated interest. It suits short-term loans, basic deposits and quick estimates where compounding does not apply. The calculation is straightforward: Interest = Principal × Rate × Time.
Enter the principal, the annual rate and the time in years. The calculator returns the interest and the total amount (principal plus interest).
It is the right tool when you want a flat, transparent interest figure without the snowball effect of compounding — for example, to estimate the interest on a short-term personal loan or a basic fixed deposit.
Enter your values to see the result.
How this is calculated
Simple interest is charged only on the original principal, never on interest that has already accrued. The calculation is the most basic in finance: Interest = Principal × Rate × Time, where the rate is the annual rate as a decimal and the time is in years. The total amount at the end is the principal plus that interest.
Because the base never grows, simple interest accrues in a straight line: doubling the time doubles the interest, and doubling the rate doubles it too. That makes it easy to reason about and well suited to short horizons, but it understates the cost or yield of anything that compounds over many years.
The model assumes a flat rate applied to the original principal for the whole period, with no compounding, no fees and no tax on the interest. It does not describe amortising loans (where interest is charged on a declining balance), credit cards (which compound), or long-term savings (which compound). For those, use the loan payment or compound interest calculators instead.
Worked example
A $5,000 deposit at a 4% annual simple interest rate for 3 years.
- 1Interest = Principal × Rate × Time = 5,000 × 0.04 × 3 = $600.
- 2Total amount = 5,000 + 600 = $5,600.
- 3Each year adds the same $200 of interest, with no growth in the base.
Frequently asked questions
- Simple vs compound interest — what’s the difference?
- Simple interest is calculated only on the principal. Compound interest is calculated on the principal plus any interest already accrued, so it grows faster over time.
- When is simple interest used?
- It is common for short-term personal loans, car loans in some markets, and basic fixed-term deposits. Mortgages and long-term savings almost always compound.
- How is time measured?
- Here, time is in years. For a 6-month period, enter 0.5. The rate is the annual rate, applied proportionally to the time entered.
- Why does simple interest cost less than compound over time?
- Simple interest always charges on the original principal, so interest accrues linearly. Compound interest charges on a growing base — principal plus prior interest — so it accelerates. Over multi-year periods the gap widens considerably.
- Is my car loan simple or compound interest?
- Most auto loans are simple-interest amortising loans: interest each month is charged on the declining balance, with no interest charged on interest. This calculator is a flat estimate, not an amortisation schedule — use the loan payment calculator for a true schedule.
Related calculators
Method: simple interest formula I = P × r × t. No external data source. Last updated: September 2026.
These results are indicative estimates for planning only and do not constitute financial advice. Actual loan terms, tax rules, investment returns and product conditions vary by country, provider and your personal circumstances. Always confirm figures with your bank, tax authority or a qualified financial adviser before making decisions.