Simple Interest Calculator
Calculate your simple interest earnings
Enter your details:
Calculation Results
Summary
Principal Amount: $0.00
Annual Interest Rate: 0%
Time Period: 0 Years
—Total Simple Interest: $0.00
Total Amount: $0.00
Simple Interest Calculator: Easy Loan & Investment Calculations
What Is Simple Interest?
Simple interest is a straightforward method of calculating interest on a loan or investment. Unlike compound interest, it does not accumulate on previously earned interest, making it easier to calculate.
Key Features of Simple Interest:
✔ Fixed interest based only on the principal amount
✔ Commonly used in short-term loans & personal loans
✔ Easier to calculate than compound interest
Simple Interest vs. Compound Interest
| Feature | Simple Interest | Compound Interest |
| Calculation | Only on the principal | On principal + accumulated interest |
| Growth Speed | Linear | Exponential |
| Common Uses | Short-term loans, car loans | Savings accounts, long-term investments |
Which is better?
- Simple interest is better for borrowers (lower total interest)
- Compound interest is better for investors (faster growth)
Simple Interest Formula
The formula for simple interest is
Simple Interest (SI) = P × R × T
Where:
- P = Principal amount (initial sum)
- R = Annual interest rate (in decimal)
- T = Time in years
Example:
- $1,000 loan at 5% for 2 years
- SI = 1000 × 0.05 × 2 = $100
How to Use Our Simple Interest Calculator
Our free online calculator makes it easy:
- Enter Principal ($) – The initial amount
- Enter Interest Rate (%) – Annual rate
- Enter Time Period – Years, months, or days
- Click “Calculate” – Get instant results
Bonus: See total repayment (principal + interest) in seconds!
Real-World Examples
Example 1: Personal Loan
- Principal: $5,000
- Rate: 7% per year
- Time: 3 years
- Interest = 5000 × 0.07 × 3 = $1,050
Example 2: Short-Term Investment
- Principal: $10,000
- Rate: 4% per year
- Time: 6 months
- Interest = 10,000 × 0.04 × 0.5 = $200
When to Use Simple Interest?
✅ Short-term loans (e.g., personal loans, auto loans)
✅ Flat-rate investments (e.g., bonds, some savings accounts)
✅ When transparency is needed (easier to understand than compound interest)
FAQs About Simple Interest
1. Is simple interest better than compound interest?
It depends.
- Borrowers prefer simple interest (lower costs).
- Investors prefer compound interest (higher growth).
2. Can simple interest be used for mortgages?
Most mortgages use compound interest, but some short-term loans use simple interest.
3. How do I convert months to years for the formula?
Divide by 12 (e.g., 6 months = 0.5 years).
Final Thoughts
A simple interest calculator helps you:
✔ Estimate loan costs before borrowing
✔ Plan investments with predictable returns
✔ Avoid complex math with instant results
Try our free calculator today and make smarter financial decisions! 💰