Simple Interest Calculator
A simple interest calculator uses I = P × r × t: multiply the principal by the yearly rate (as a decimal) and by the time in years. For $10,000 at 5% for 3 years, I = 10,000 × 0.05 × 3 = $1,500, so the total amount is A = P + I = $11,500. Change any three values to solve for the fourth.
Show steps
- Write down what you know: principal P = $10,000.00, rate 5% a year, time 3 years.
- Write the rate as a decimal: r = 5% ÷ 100 = 0.05.
- Time is already in years: t = 3.
- Multiply: I = P × r × t = 10,000 × 0.05 × 3 = 1,500, so the interest is $1,500.00.
- Add the interest to the principal: A = P + I = $10,000.00 + $1,500.00 = $11,500.00. In one step, A = P(1 + rt) = 10,000 × (1 + 0.05 × 3) = 10,000 × 1.15 = 11,500.
- Simple interest grows by the same amount every year: P × r = $500.00 a year, which is $41.67 a month.
| Time | Simple | Compound | Extra |
|---|---|---|---|
| Year 1 | $10,500.00 | $10,500.00 | $0.00 |
| Year 2 | $11,000.00 | $11,025.00 | $25.00 |
| End (3 years) | $11,500.00 | $11,576.25 | $76.25 |
Compound balances use A = P(1 + r/n)^(nt) with the rate as a yearly nominal rate and n = 1 compounding periods a year. For a part of a period, this calculator adds simple interest on the balance at that point.
How to use the simple interest calculator
- Choose what you want to find: the interest and total amount, the principal, the rate or the time.
- Type the values you know. When you solve for P, r or t, pick whether you know the total amount (A) or only the interest (I).
- Enter time in years, months, weeks or days, or pick two dates. For days, weeks and dates, choose a 365-day or 360-day year.
- Read the answer, then open Show steps for the full working. The Simple vs compound interest box shows what the same rate would earn if it compounded annually, quarterly, monthly or daily.
Simple interest formula
Simple interest is paid only on the original amount, the principal. The interest from one year never earns interest itself, so the interest is the same every year.
I = P × r × t and A = P + I = P(1 + rt)
- I is the interest earned or owed.
- P is the principal, the amount deposited or borrowed.
- r is the yearly interest rate as a decimal: 5% becomes 0.05.
- t is the time in years: 18 months is 1.5 years, and 90 days is 90 ÷ 365 years.
- A is the total amount at the end: principal plus interest.
The rate and the time must use the same unit. If the rate is per year, time must be in years. If a rate is quoted per month, multiply it by 12 first, or measure time in months.
Solving I = Prt for P, r or t
Because I = Prt is a product, you can solve for any one letter by dividing by the other two:
| To find | Formula | Example |
|---|---|---|
| Interest | I = P × r × t | 10,000 × 0.05 × 3 = $1,500 |
| Principal | P = I ÷ (r × t) or P = A ÷ (1 + rt) | 12,000 ÷ (1 + 0.05 × 4) = $10,000 |
| Rate | r = I ÷ (P × t) | 4,800 ÷ (22,000 × 4) ≈ 0.054545 = 5.4545% |
| Time | t = I ÷ (P × r) | 1,500 ÷ (10,000 × 0.05) = 3 years |
If you know the total amount instead of the interest, find the interest first with I = A − P.
Simple interest examples
Example 1: savings for 3 years
You put $10,000 in an account that pays 5% simple interest for 3 years. The interest each year is 10,000 × 0.05 = $500, so over 3 years I = $500 × 3 = $1,500 and you end with $11,500.
Example 2: a loan for 18 months
You borrow $2,500 at 3.2% simple interest for 18 months. First turn months into years: t = 18 ÷ 12 = 1.5. Then I = 2,500 × 0.032 × 1.5 = $120, and you repay A = $2,620.
Example 3: finding the rate
A deposit of $22,000 grows to $26,800 in 4 years with simple interest. The interest is 26,800 − 22,000 = $4,800, so r = 4,800 ÷ (22,000 × 4) ≈ 0.054545, about 5.45% a year.
Interest for days and months: 365-day vs 360-day year
For a whole number of months, divide by 12: 9 months is 0.75 years. For days, you divide by the number of days in a year, and there are two common conventions:
- Actual/365: t = days ÷ 365. The daily rate is exactly one 365th of the yearly rate.
- Actual/360 (the banker’s year): t = days ÷ 360. Each day’s interest is 365 ÷ 360 ≈ 1.0139 times larger, so over a full 365-day year you pay or earn a little more than the stated rate.
Take $5,000 at 6% for 270 days. With 365 days, I = 5,000 × 0.06 × 270 ÷ 365 ≈ $221.92. With 360 days, I = 5,000 × 0.06 × 270 ÷ 360 = $225.00. For deposit accounts, the CFPB’s official interpretation of Regulation DD says banks may use a daily rate greater than 1/365 of the interest rate, such as 1/360, as long as it is applied 365 days a year. Your account or loan agreement says which method applies; the calculator lets you switch between them.
Simple interest vs compound interest
With compound interest, interest is added to the balance, and later interest is figured on that larger balance. The CFPB describes compound interest as earning interest on your savings and on the interest you earn along the way. Here is $10,000 at 5% a year:
| Years | Simple interest balance | Compounded annually | Difference |
|---|---|---|---|
| 1 | $10,500.00 | $10,500.00 | $0.00 |
| 2 | $11,000.00 | $11,025.00 | $25.00 |
| 3 | $11,500.00 | $11,576.25 | $76.25 |
| 5 | $12,500.00 | $12,762.82 | $262.82 |
| 10 | $15,000.00 | $16,288.95 | $1,288.95 |
| 20 | $20,000.00 | $26,532.98 | $6,532.98 |
Simple interest grows in a straight line; compound interest curves upward. Over one year with annual compounding they match, and the gap widens every year after that. For long-term savings, our compound interest calculator works out growth with compounding.
Simple interest on $10,000: quick reference
| Yearly rate | 1 year | 1 month | 30 days (365-day year) | 30 days (360-day year) |
|---|---|---|---|---|
| 2% | $200.00 | $16.67 | $16.44 | $16.67 |
| 3% | $300.00 | $25.00 | $24.66 | $25.00 |
| 4% | $400.00 | $33.33 | $32.88 | $33.33 |
| 5% | $500.00 | $41.67 | $41.10 | $41.67 |
| 6% | $600.00 | $50.00 | $49.32 | $50.00 |
| 8% | $800.00 | $66.67 | $65.75 | $66.67 |
| 10% | $1,000.00 | $83.33 | $82.19 | $83.33 |
For a different principal, scale the row: $2,500 is a quarter of $10,000, so at 6% for one year it earns $150.
Where simple interest is used
- Short-term loans and notes, where interest is figured on the amount borrowed for the days it is outstanding.
- Interest paid out instead of added, such as an account or bond that sends you the interest each period: the balance never grows, so each payment is P × r for that period.
- Quick estimates for one year or less, where simple and compound interest give almost the same answer.
- Math class, where I = Prt is the first interest formula students learn before moving on to compound interest and amortized loans.
Common mistakes with simple interest
- Using the percent as a whole number. 5% is 0.05, not 5. Using 5 gives an answer 100 times too large.
- Mixing units. With a yearly rate, 18 months must become 1.5 years, not 18.
- Forgetting to add the principal. I is only the interest; the total you have or owe is A = P + I.
- Ignoring the day count. 90 days is 90 ÷ 365 or 90 ÷ 360 years, and the two give different answers.
- Using simple interest for an amortized loan. On a car loan or mortgage paid monthly, the balance falls each month, so 7.5% of $25,000 for 5 years ($9,375) overstates the real interest.
Results are estimates rounded to the cent. Your bank or lender may round differently or use another day-count method, so check your agreement. This is not financial advice.
Sources
- CFPB: Regulation DD official interpretation, §1030.7 Payment of interest (daily rate of 1/365 or 1/360), checked November 2026
- CFPB: How does compound interest work?, checked November 2026
Simple interest practice quiz: 10 questions
Test yourself with 10 multiple-choice questions. Choose an answer and press Submit to see if you are right and why. Your score appears at the end.
I = P × r × t = 4,000 × 0.06 × 3 = $720. $240 is only one year, $7,200 comes from using 0.6 instead of 0.06, and $764.06 is what annual compounding would earn.
I = 8,000 × 0.05 × 2 = $800, so A = P + I = $8,800. $8,820 is the compound amount and $8,400 uses only one year.
Nine months is 9 ÷ 12 = 0.75 years, so I = 3,600 × 0.04 × 0.75 = $108. Using t = 9 gives $1,296.
t = 60 ÷ 365, so I = 7,300 × 0.05 × 60 ÷ 365 = $60. A 360-day year would give about $60.83.
I = 2,300 − 2,000 = $300, so r = 300 ÷ (2,000 × 3) = 0.05 = 5%. 15% is the total growth over all 3 years.
Doubling means I = P, so P × 0.08 × t = P and t = 1 ÷ 0.08 = 12.5 years. 9 years is the rule-of-72 estimate for compound interest.
Simple: 1,000 × 0.10 × 2 = $200. Compound: 1,000 × 1.1² − 1,000 = $210. The difference is $10, the interest earned on the first year's $100 of interest.
1% a month is 12% a year, so I = 12,000 × 0.12 × 1.5 = $2,160. Equivalently, 18 months × $120 a month = $2,160.
Quiz complete
Frequently asked questions
How do you calculate simple interest?
Multiply the principal by the yearly rate as a decimal and by the time in years: I = P × r × t. For $10,000 at 5% for 3 years, I = 10,000 × 0.05 × 3 = $1,500.
How do you find the total amount with simple interest?
Add the interest to the principal, or use A = P(1 + rt) in one step. For $10,000 at 5% for 3 years, A = 10,000 × 1.15 = $11,500.
How do you calculate simple interest for months or days?
Turn the time into years first. Divide months by 12 and days by 365 (or by 360 if your agreement uses a 360-day year). $10,000 at 5% for 30 days earns about $41.10 on a 365-day year and $41.67 on a 360-day year.
What is the difference between simple and compound interest?
Simple interest is charged only on the principal, so it is the same every year. Compound interest is also charged on interest already added, so it grows faster. $10,000 at 5% for 10 years earns $5,000 with simple interest but $6,288.95 compounded annually.
How long does it take to double money with simple interest?
Doubling means the interest equals the principal, so t = 1 ÷ r. At 5% simple interest, money doubles in 1 ÷ 0.05 = 20 years; at 8%, in 12.5 years.
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