Simple Interest Calculator
Calculate simple interest using the formula I = P × R × T.
Find Interest
Find Principal
Find Rate
Simple Interest
—
I = P × R × T
Interest Earned
—
Total Amount
—
Principal
—
Effective Rate
—
Simple Interest
Simple interest is calculated only on the original principal, not on accumulated interest. It's commonly used for short-term loans and investments.
I = P × R × T
Where I = Interest, P = Principal, R = Rate (annual), T = Time (years)
Comparing Simple vs Compound Interest
| Aspect | Simple Interest | Compound Interest |
|---|---|---|
| Calculation Base | Principal only | Principal + accumulated interest |
| Growth | Linear | Exponential |
| Return | Lower | Higher |
| Common Use | Short-term loans | Long-term investments |
Example
$1000 at 5% annual rate for 3 years:
I = $1000 × 0.05 × 3 = $150
Total = $1000 + $150 = $1150
Frequently Asked Questions
When is simple interest used?
Simple interest is typically used for short-term loans, car loans, some bonds, and when the interest period is less than a year.
How do I convert months to years?
Divide the number of months by 12. For 6 months, use 0.5 years. For 18 months, use 1.5 years.