What is my simple interest?
Calculate simple interest on loans and investments. Understand basic interest calculations.
- Interest
- $5,000.00
Simple interest on $10,000.00 at 5% a year for 10 years is $5,000.00, for a total of $15,000.00.
- Total amount
- $15,000.00
Interest: $5,000.00. Simple interest on $10,000.00 at 5% a year for 10 years is $5,000.00, for a total of $15,000.00.
Total amount by time
The results are estimates for information only. They are not financial, tax, or legal advice. Check the numbers with your lender or a qualified professional before you decide. Terms of use
How to calculate
Computes simple interest, I = P × r × t, and the total amount, or solves for the principal, rate, or time from the others.
Example with the default inputs (Principal $10,000.00, Interest rate (per year) 5%, Time 10, Time in years): Simple interest on $10,000.00 at 5% a year for 10 years is $5,000.00, for a total of $15,000.00.
Formula: I = P × r × t, with r per year and t in years (months ÷ 12, days ÷ 365); A = P + I.
- Interest is charged on the principal only; it never earns interest itself.
- A time in months is months ÷ 12 years; a time in days is days ÷ 365 years.
- The rate is a yearly rate and does not change.
Worked examples
Each example is checked against the calculator on every build.
- Principal $5,000.00, Interest rate (per year) 3.5%, Time 18, Time in months gives Interest $262.50.Source: OpenStax, Prealgebra 2e, §6.4 Solve Simple Interest Applications (I = Prt). https://openstax.org/books/prealgebra-2e/pages/6-4-solve-simple-interest-applications
- Principal $10,000.00, Interest rate (per year) 5%, Time 3, Time in years gives Interest $1,500.00, Total amount $11,500.00.Source: OpenStax, Prealgebra 2e, §6.4 Solve Simple Interest Applications (I = Prt). https://openstax.org/books/prealgebra-2e/pages/6-4-solve-simple-interest-applications
- Principal $10,000.00, Interest rate (per year) 6%, Time 90, Time in days gives Interest $147.95, Total amount $10,147.95.Source: OpenStax, Prealgebra 2e, §6.4 Solve Simple Interest Applications (I = Prt). https://openstax.org/books/prealgebra-2e/pages/6-4-solve-simple-interest-applications
- Interest $500.00, Interest rate (per year) 5%, Time 2, Time in years gives Principal $5,000.00, Total amount $5,500.00.Source: OpenStax, Prealgebra 2e, §6.4 Solve Simple Interest Applications (I = Prt). https://openstax.org/books/prealgebra-2e/pages/6-4-solve-simple-interest-applications
- Principal $10,000.00, Interest $1,000.00, Time 2, Time in years gives Interest rate (per year) 5%.Source: OpenStax, Prealgebra 2e, §6.4 Solve Simple Interest Applications (I = Prt). https://openstax.org/books/prealgebra-2e/pages/6-4-solve-simple-interest-applications
- Principal $10,000.00, Interest rate (per year) 5%, Interest $1,500.00, Time in years gives Time 3, Total amount $11,500.00.Source: OpenStax, Prealgebra 2e, §6.4 Solve Simple Interest Applications (I = Prt). https://openstax.org/books/prealgebra-2e/pages/6-4-solve-simple-interest-applications
How simple interest is worked out
Simple interest is charged on the principal only. With a principal P, a yearly rate r (as a decimal), and a time t in years:
I = P × r × t
A = P + I
A time in months is t = months ÷ 12. A time in days is t = days ÷ 365 (a 365-day year). The “Time in” switch says how the number in the Time box is meant: switching it keeps the typed number and reads it in the new unit (10 years becomes 10 months). It does not convert the number.
Fill any three of the four boxes (principal, rate, time, interest) and the calculator finds the fourth, then the total A = P + I:
- P = I ÷ (r × t)
- r = I ÷ (P × t)
- t = I ÷ (P × r)
Assumptions
- Interest never earns interest itself (that would be compound interest).
- The rate is a yearly rate and does not change.
Worked examples by hand
$10,000 at 5% for 3 years. I = 10,000 × 0.05 × 3 = $1,500. Total: 10,000 + 1,500 = $11,500.
$10,000 at 6% for 90 days. I = 10,000 × 0.06 × 90 ÷ 365 = $147.95. Total: $10,147.95.
What principal earns $500 at 5% in 2 years? P = 500 ÷ (0.05 × 2) = $5,000, so the total is $5,500.
What rate turns $10,000 into $1,000 of interest in 2 years? r = 1,000 ÷ (10,000 × 2) = 0.05 = 5%.
$5,000 at 3.5% for 18 months. I = 5,000 × 0.035 × 18 ÷ 12 = $262.50.
How long does $10,000 at 5% take to earn $1,500? t = 1,500 ÷ (10,000 × 0.05) = 3 years.
Other questions people ask
What is Simple Interest?
Simple interest is interest that is calculated only on the initial principal amount borrowed or invested. Unlike compound interest, simple interest does not accumulate on previously earned interest. The formula for simple interest is: I = P × r × t, where I is the interest, P is the principal, r is the annual interest rate, and t is the time in years.
How is Simple Interest Calculated?
Simple interest is calculated using the formula: I = P × r × t. For example, if you invest $10,000 at 5% annual interest for 3 years, the calculation would be: $10,000 × 0.05 × 3 = $1,500. The total amount after 3 years would be $10,000 + $1,500 = $11,500.
What's the Difference Between Simple and Compound Interest?
Simple interest is calculated only on the original principal amount, while compound interest is calculated on both the principal and any accumulated interest. Compound interest typically results in higher returns over time because you earn interest on your interest. Simple interest is often used for short-term loans or investments, while compound interest is more common for long-term investments.
When is Simple Interest Used?
Simple interest is commonly used for short-term loans, car loans, personal loans, and some types of bonds. It's also used in some savings accounts and certificates of deposit (CDs) that pay simple interest rather than compound interest. Simple interest is preferred when you want predictable, linear growth without the complexity of compounding.
Can I Calculate Simple Interest for Different Time Periods?
Yes, you can calculate simple interest for any time period. The key is to convert the time period to years. For example, for 6 months, use 0.5 years; for 18 months, use 1.5 years; for 90 days, use 90/365 = 0.247 years. Our calculator handles years, months, and days automatically, using a 365-day year for days.
How Do I Find the Principal Amount?
If you know the interest earned, rate, and time, you can find the principal using the formula: P = I / (r × t). For example, if you earned $500 in interest at 5% for 2 years, the principal would be: $500 / (0.05 × 2) = $5,000.
How Do I Find the Interest Rate?
If you know the principal, interest earned, and time, you can find the interest rate using the formula: r = I / (P × t). For example, if you invested $10,000 and earned $1,000 in interest over 2 years, the rate would be: $1,000 / ($10,000 × 2) = 0.05 or 5%.
What are the Advantages of Simple Interest?
Simple interest offers predictable, linear growth that's easy to understand and calculate. It's transparent - you know exactly how much interest you'll earn or pay. Simple interest is often better for borrowers on short-term loans since they don't pay interest on accumulated interest. It's also useful for financial planning when you need consistent, predictable returns.
What are the Disadvantages of Simple Interest?
Simple interest typically provides lower returns compared to compound interest over long periods. As an investor, you miss out on the potential for exponential growth that compound interest offers. Simple interest doesn't account for the time value of money as effectively as compound interest, which can be a disadvantage for long-term investments.
Is Simple Interest Better for Borrowers or Lenders?
Simple interest is generally better for borrowers because they pay less total interest over time compared to compound interest loans. However, for lenders or investors, simple interest typically provides lower returns. Most modern financial products use compound interest because it better reflects the true cost of borrowing and the potential returns on investment.