Simple Interest Calculator
Four modes: calculate final balance, find principal, find rate, or find term. Formula: I = P × r × t. Shows total interest and step-by-step breakdown.
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How It Works
Enter principal P, annual rate r (%), and term t (years). A = P × (1 + r × t). The interest I = A − P displays alongside. Example: $5,000 at 6% for 2 years: I = $600, total = $5,600. The step-by-step shows how each factor contributes.
A = P(1 + rt) | I = Prt$5,000 at 6% for 2yr: I=$600, total=$5,600Enter total amount A (or interest I), rate, and time. The calculator solves P = A / (1 + rt) or P = I / (rt). Example: you paid $1,200 total on a 1-year loan at 10%: P = 1200 / 1.10 = $1,090.91.
P = A / (1 + rt) | P = I / (rt)A=$1,200, r=10%, t=1yr → P=$1,090.91Enter principal, total interest earned (or total amount), and time. r = I / (P × t). Example: $2,000 grew to $2,180 in 18 months: I = $180, t = 1.5yr, r = 180 / (2000 × 1.5) = 0.06 = 6%.
r = I / (Pt) | expressed as annual rate$2,000 → $2,180 in 18mo: r = 180/(2000×1.5) = 6%Enter principal, interest earned, and rate. t = I / (P × r). Example: $10,000 at 4%, need $800 interest: t = 800 / (10000 × 0.04) = 2 years. Simple interest problems commonly ask for term when rate and interest amount are both known.
t = I / (Pr)$10,000 at 4%, need $800 interest → t = 2 yearsSimple interest I = Prt grows linearly — same amount every year. Compound interest grows exponentially. The difference widens over time: $10,000 at 5% over 20 years: simple = $10,000 interest, compound monthly = $17,137 interest. For short terms (<2 years), the difference is small.
Simple: A = P(1+rt) vs Compound: A = P(1+r/n)^(nt)$10,000 at 5%, 20yr: simple $10k vs compound $17.1k interestQuick Reference
Verify these in the calculator above.
Balance
$1,000 at 5% for 3yr
I=$150, total=$1,150
Balance
$5,000 at 6% for 2yr
I=$600, total=$5,600
Rate
Rate: $200 earned on $10k, 2yr
1% per year
Term
Term: $10k at 4%, need $800
2 years
Principal
Principal: $1,150 total, 5%, 3yr
P=$1,000
Short term
$50k at 3% for 6mo
I=$750
Comparison
Simple vs compound $10k, 5%, 20yr
Simple=$10k vs $17.1k
Monthly rate
$2,000 at 1%/mo (=12%/yr), 1yr
I=$240
Tips & Shortcuts
Use the Rate mode to compare two loan offers — enter the principal and total interest for each to find which has the lower effective rate.
The payment schedule shows linear growth — each period adds the same interest. If you see accelerating growth, the calculator is using compound interest instead.
For loans quoted as monthly rates, enter the rate × 12 as the annual rate. A 1% monthly rate = 12% simple annual rate.
Simple interest on 18-month terms: enter t = 1.5 years (or use months and divide rate by 12).
Car dealers sometimes use the Rule of 78s (a front-loaded simple interest method). This calculator uses standard simple interest — the Rule of 78s results will differ slightly.
Common Mistakes
Entering rate as a decimal instead of percentage
Enter 5 for 5%, not 0.05. The calculator expects percentage format. Entering 0.05 gives 0.05% which is nearly zero.
Mixing up time units
If the rate is annual and the term is in months, convert: t = months/12. A 6-month loan at 6% annual rate: t = 0.5 years, I = P × 0.06 × 0.5 = P × 0.03.
Confusing simple interest total with compound interest result
Simple interest total A = P + Prt. Compound total = P(1+r/n)^(nt). For short terms the difference is small, but for 10+ year investments compound interest is significantly higher.
Using the formula for monthly payment calculation
Simple interest gives total interest over the full term, not a monthly payment. For loan monthly payment calculations, use the Loan Calculator which applies the amortization formula.
Forgetting that r must be the annual rate
Simple interest formula uses the annual rate regardless of compounding period. A quarterly rate of 2% is an annual rate of 8% (simple), not 2.0×4=8% exactly but approximately.
Frequently Asked Questions
Simple interest: I = P × r × t. P = principal, r = annual rate (decimal), t = time in years. Total amount: A = P + I = P(1 + rt). Example: $1,000 at 5% for 3 years: I = 1000 × 0.05 × 3 = $150, total = $1,150.
Simple interest is calculated on the original principal only. Compound interest is calculated on the principal plus accumulated interest. $1,000 at 5% for 10 years: simple = $500 interest; compound monthly = $647 interest. Compound always earns more.
P = I / (r × t) or P = A / (1 + rt). Use the Principal mode — enter total amount, rate, and time to find the original principal. Example: end up with $1,150 after 3 years at 5%: P = 1150 / (1 + 0.05×3) = $1,000.
r = I / (P × t). Use Rate mode — enter principal, total interest earned, and time. Example: $1,000 earned $150 in 3 years: r = 150 / (1000 × 3) = 0.05 = 5%.
t = I / (P × r). Use Term mode — enter principal, interest earned, and rate. Example: $1,000 at 5% earned $200: t = 200 / (1000 × 0.05) = 4 years.
Simple interest applies to short-term loans, car loans (using the Rule of 78s), some personal loans, US Treasuries (most bonds use simple interest between coupon dates), and savings accounts that do not compound. Most long-term investments use compound interest.
The payment schedule shows the interest accrued and remaining balance for each period (monthly or annual depending on the term). It demonstrates how simple interest accrues linearly — the same amount every period, unlike compound interest which grows exponentially.
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