Simple Interest Calculator
Calculate simple interest and the total amount due using I = P × r × t, with time in years, months or days.
The simple interest formula
Simple interest is charged or earned only on the original amount, called the principal. It does not compound, so the interest is the same every year.
I = P × r × t A = P + I
I is the interest, P the principal, r the annual rate as a decimal and t the time in years. If your time is in months, divide by 12; if it is in days, this calculator divides by 365 (some banks use 360, which gives slightly more interest).
Example
$5,000 at 5% for 3 years earns 5,000 × 0.05 × 3 = $750 in interest, for a total of $5,750. With annual compounding the same deposit would reach $5,788.13, so simple interest earns $38 less.
Where simple interest is used
- Many car loans and some personal loans calculate interest on a simple daily basis.
- Short-term loans between friends or businesses often use a flat simple rate.
- Treasury bills, certificates of deposit with interest paid out, and many bonds pay simple interest on their face value.
For savings that reinvest their interest, use the compound interest calculator instead, since it reflects how the balance actually grows.
Frequently asked questions
How do I calculate simple interest for months?
Convert months to years by dividing by 12. For example, 18 months is 1.5 years, so $1,000 at 6% for 18 months earns 1,000 × 0.06 × 1.5 = $90.
Is simple interest better than compound interest?
For a borrower, simple interest is cheaper. For a saver, compound interest earns more because interest is earned on previous interest.
Should I use 360 or 365 days a year?
Use what your lender or bank uses. US consumer loans usually use 365 days; some commercial loans and money-market instruments use a 360-day year.
Last reviewed Oct 20, 2026. Results are estimates; check important decisions with a qualified professional.