Simple Interest Calculator: Interest, Principal, Rate, Time

About the Simple Interest Calculator

The Simple Interest Calculator works out the interest earned or owed when interest is charged on the principal only. Enter the principal, the annual interest rate and the time, and it shows the interest, the total amount and a year-by-year breakdown. It can also run the formula backwards: choose what you want to find and it solves for the principal, the rate or the time from the other three values.

Simple interest is used for many short-term loans, some car loans, bonds that pay a fixed coupon, and savings products that pay interest out instead of adding it to the balance. Because interest is never earned on earlier interest, the same amount is added every year. Time can be entered in years, months or days. Months are divided by 12 and days by a 365-day year. Results are shown to the cent with no currency symbol, so the tool works with any currency. The results are estimates for planning; your bank or lender may round or count days differently.

How to use it

The formulas

With a principal $P$, an annual rate $r$ written as a decimal and a time $T$ in years, the interest and the total amount are

$$I = P \times r \times T, \qquad A = P + I$$

The same equation rearranged gives the other three values:

$$P = \frac{I}{r \times T}, \qquad r = \frac{I}{P \times T}, \qquad T = \frac{I}{P \times r}$$

A time in months is $T = \text{months} \div 12$ and a time in days is $T = \text{days} \div 365$.

Worked examples

• 10,000 at 5% for 3 years. $10{,}000 \times 0.05 \times 3 = 1{,}500$, so the interest is 1,500.00 and the total is 11,500.00.
• 5,000 at 4% for 90 days. $5{,}000 \times 0.04 \times 90 \div 365 = 49.32$, for a total of 5,049.32.
• Principal from 300 of interest at 5% over 2 years. $300 \div (0.05 \times 2) = 3{,}000$.
• Rate from 360 of interest on 4,000 over 36 months. $360 \div (4{,}000 \times 3) = 0.03$, which is 3.00% a year.
• Time for 1,000 at 8% to earn 200. $200 \div (1{,}000 \times 0.08) = 2.5$ years, which is 30 months or 912.5 days.

Simple or compound interest?

Simple interest grows in a straight line. Compound interest adds each period's interest to the balance, so later interest is earned on earlier interest as well and the balance grows faster every year. Over one year the two are close; over ten years or more the gap is large. To see how a balance grows when interest is added to it, with regular deposits, use the Compound Interest Calculator. For a loan that is paid back in equal monthly instalments, use the Loan Calculator.

Privacy

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Frequently asked questions