Calculate simple interest in seconds

Simple interest is the most basic way to calculate the cost or return of borrowing or lending money: interest = principal × (rate ÷ 100) × time. Unlike compound interest, the interest amount is calculated once on the original principal and stays exactly the same for every period of the loan or investment — it never grows on top of interest already earned.

That makes simple interest calculations straightforward to predict: a $10,000 loan at 5% for 3 years always accrues exactly $1,500 in interest ($10,000 × 0.05 × 3), whether that's the first year or the third. There's no compounding effect pulling the number up or down over time, which is why simple interest is easier to reason about but usually produces a smaller total than compound interest over the same period.

In practice, simple interest shows up in short-term loans, certain auto loans, some bonds, and basic savings calculations used for teaching the concept of interest. Most everyday financial products you'll encounter — mortgages, credit cards, and most savings accounts — actually use compound interest, where interest is calculated periodically and added back to the principal, so future interest is earned on a growing balance.

If you want to see how the same principal, rate, and time perform when interest compounds instead of staying flat, our Compound Interest Calculator runs the same numbers through the compounding formula so you can compare the two side by side. The gap between simple and compound interest grows larger the longer the time period and the higher the interest rate.

This calculator assumes a fixed annual rate applied uniformly across the full time period you enter, with time allowed in fractional years (for example, 2.5 years for two and a half years). It's meant for quick estimates and education, not as a substitute for the exact terms disclosed in a loan agreement or investment prospectus.