Simple Interest Calculator
Compute interest on a principal amount using the simple interest formula I = P × r × t. Useful for short-term loans, government bonds, and settlement estimates.
Last updated: September 2026
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About this calculator
Simple interest accrues on the original principal only. Unlike compound interest, previously earned interest is never added to the base. The formula is I = P × r × t, where P is the principal, r is the annual rate as a decimal, and t is the time in years.
Simple interest shows up in short-term instruments (Treasury bills, some auto and personal loans in certain jurisdictions), legal settlement calculations, and the interest-on-arrears clauses in commercial contracts. Most consumer loans in the US are actually 'simple interest amortizing' — the interest at each payment is computed on the current outstanding balance, so the effect looks like compounding even though each period is technically simple.
Compound interest at the same nominal rate produces more money because interest is reinvested. Over 3 years at 5%, simple gives 15% total return; compound (annually) gives 15.76%; compound (monthly) gives 16.15%. The gap widens with time — after 30 years, 5% simple gives 150% total, monthly compound gives 347%.
How to use
Example — a 3-year 5% CD-style deposit. Enter Principal = 1000, Rate = 5, Time = 3. Result = 1000 × 0.05 × 3 = $150 interest. Total value after 3 years = principal + interest = $1150. Example — 90-day trade credit. A supplier offers 8% simple interest on unpaid balances. On a $10 000 invoice held for 90 days, enter 10000, 8, and 0.2466 (90/365). Result ≈ $197.26 in interest owed. Note that the calculator takes years as its time unit; convert months by ÷12 and days by ÷365 first. For the compound alternative on the same money, see /en/calculators/financial/compound-interest/.
Frequently asked questions
When would I use simple interest instead of compound?
For short horizons (under a year), the two are effectively equal. Simple interest is common in Treasury bills (fixed discount, no reinvestment), auto loans in some jurisdictions, and legal-judgment interest that laws fix at a simple rate. For long-term saving or borrowing, compound is the default.
What is the difference from APR?
APR (annual percentage rate) is the annualized cost of a loan including fees, quoted on a simple-interest basis. APY (annual percentage yield) is the same rate but assumes reinvestment — it is the compound-interest equivalent. For deposits, banks quote APY; for loans, lenders quote APR. Use /en/calculators/financial/apr-calculator/ to compute an APR that includes fees.
How do I convert days or months to years?
Divide days by 365 (or 360 for some bond conventions), months by 12. So 90 days = 0.2466 years, 6 months = 0.5 years. Some loan contracts use 360-day years and quote interest on that basis — read the fine print.
Is simple interest ever more than compound?
Only if the compounding period is longer than the loan term, which almost never happens. For any positive time and rate with periodic compounding, compound interest strictly dominates. The gap grows with rate and time — at 10% over 30 years, monthly compound gives 19.8x, simple gives just 4x.