Simple Interest Calculator

Calculate interest earned on a principal balance at a fixed rate without compounding.

How the simple interest calculator works

Simple interest is calculated on the original principal only — it never compounds. The formula is A = P(1 + rt): interest equals principal × rate × time, and it accrues in a straight line. Double the time, double the interest.

That linearity is the key difference from compound interest. A 5% simple-interest account earns the same dollar amount every year, while a compounding account earns a little more each year. Over short periods the difference is small; over decades it is enormous.

Simple interest still shows up in the real world: many auto loans, short-term personal loans, bonds quoted with flat coupons, and late-payment penalties are computed this way.

How to use this calculator

Enter the principal amount.
Enter the annual interest rate.
Set the time period in years (half-years are supported).
Press Calculate to see the interest earned and total value.

Key terms

Simple interest: Interest computed only on the original principal, never on accrued interest.
Principal: The starting amount that earns interest.
Flat rate: A quoted rate applied to the original balance for the whole term — the hallmark of simple-interest products.

Tips

When comparing a simple-interest loan to a compounding one, compare total dollars paid, not the quoted rates.
For savings, compounding always beats simple interest at the same rate — check which one a product actually pays.
Simple interest on short terms (under a year) is often quoted pro-rata: 6% annual for 6 months charges 3%.

Frequently asked questions

What is the difference between simple and compound interest?

Simple interest is computed only on the original principal, so it grows linearly. Compound interest is computed on principal plus previously earned interest, so it grows exponentially. Use our compound interest calculator to compare the two side by side.

Where is simple interest used in practice?

Most commonly in auto loans, short-term personal loans, some student loans, bond coupon quotes, and late fees. Most savings accounts and credit cards compound instead.

Can I calculate partial years?

Yes — the time field accepts half-year steps, and the formula handles fractional time naturally: 18 months at 4% on $1,000 earns $1,000 × 0.04 × 1.5 = $60.

Planning further? Try the compound interest calculator or the apy calculator.

Compound Interest Calculator

See how your savings grow over time with compound interest and regular monthly contributions.

APY Calculator

Convert a nominal interest rate to its effective annual yield (APY) and see what a deposit earns.