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Calculate simple interest earned, principal amount, and total accumulated balance using the standard formula I = P × r × t.
Simple Interest calculates interest charges or earnings strictly on the initial principal amount, without compounding. Use this simple interest calculator for short-term loans and bonds.
A Simple Interest calculator quickly determines the interest charge on a loan or total returns on a simple interest deposit. Unlike compound interest, simple interest grows linearly over time.
Simple interest is directly proportional to the principal, interest rate, and duration.
I = P × r × tI = total interest, P = principal amount, r = annual interest rate (decimal), t = time in years.A = P + I = P × (1 + r × t)A = final total amount including principal and interest.With $10,000 principal at 5% per year over 3 years, interest equals $10,000 × 0.05 × 3 = $1,500, making total balance $11,500.
Borrowing $50,000 at 8% simple interest over 5 years results in $20,000 total interest ($70,000 total payoff).
Simple interest is interest calculated exclusively on the principal amount, without compounding previously earned interest.
Simple interest remains constant each period based on principal, whereas compound interest adds earned interest back to principal, causing accelerated growth.
Simple interest is commonly used for short-term personal loans, auto loans, consumer installment financing, and treasury bills.