Financial Tool

Simple Interest Calculator

Calculate SI = P × R × T.

Σ The Formula

Simple Interest = Principal × Rate × Time / 100 | Total Amount = Principal + Interest

Real World Examples

Savings Account
$5,000 at 3% for 2 years: Interest = $5,000 × 0.03 × 2 = $300, Total = $5,300
Short-term Loan
$1,000 at 5% for 1 year: Interest = $1,000 × 0.05 × 1 = $50, Total = $1,050
Bond Investment
$10,000 at 4% for 3 years: Interest = $10,000 × 0.04 × 3 = $1,200, Total = $11,200
Certificate of Deposit
$2,500 at 2.5% for 18 months (1.5 years): Interest = $93.75, Total = $2,593.75

# About This Calculator

Simple interest is a straightforward method of calculating interest where the interest is calculated only on the principal amount, not on accumulated interest. Unlike compound interest, simple interest doesn't "snowball" - you earn the same amount each period based solely on your initial investment or loan amount.

Simple interest is commonly used for short-term loans (car loans, personal loans), some bonds, certificates of deposit (CDs), and basic savings accounts. The formula I = P × R × T is easy to understand and calculate: multiply your principal by the annual interest rate (as a decimal) by the time period in years.

While simple interest is less common than compound interest for long-term investments, it's valuable for understanding basic financial concepts and for situations where interest doesn't accumulate. It's also easier to budget for loans with simple interest since payments remain consistent.

This calculator helps you quickly determine how much interest you'll earn on an investment or owe on a loan, plus the total amount after the interest period. It's perfect for comparing loan offers, planning short-term investments, or understanding the cost of borrowing.

How To Use

  1. Enter Principal.
  2. Enter Rate (%).
  3. Enter Time (years).

Frequently Asked Questions

What's the difference between simple and compound interest?+

Simple interest calculates only on the principal: I = P × R × T. Compound interest calculates on principal + accumulated interest: A = P(1 + r)^t. For $1,000 at 5% for 3 years: Simple = $150 interest, Compound = $157.63. The difference grows dramatically over time.

When is simple interest used instead of compound?+

Simple interest is used for: short-term loans (auto loans, personal loans under 5 years), some bonds, certificates of deposit, and situations where interest is paid out regularly rather than reinvested. Most long-term investments use compound interest.

How do I calculate simple interest for months instead of years?+

Convert months to years by dividing by 12. For 6 months, use 0.5 years. For 18 months, use 1.5 years. Example: $1,000 at 6% for 9 months = $1,000 × 0.06 × 0.75 = $45 interest.

Can I use this to compare different loan offers?+

Yes! Calculate the total interest for each loan option. A $10,000 loan at 4% for 3 years costs $1,200 in interest, while the same loan at 5% costs $1,500 - a $300 difference. Always compare both rate and term.

What's a good simple interest rate?+

It depends on the context. For savings (2023-2024): 3-5% is good for CDs. For loans: under 5% is excellent, 5-10% is average, over 10% is high. Always compare current market rates and consider inflation when evaluating returns.

Is Simple Interest Calculator free to use?+

Yes, Simple Interest Calculator on Matheric is completely free to use. We believe in accessible education and utility for everyone.

About

Simple interest is a straightforward method of calculating interest where the interest is calculated only on the principal amount, not on accumulated interest. Unlike compound interest, simple interest doesn't "snowball" - you earn the same amount each period based solely on your initial investment or loan amount.

Simple interest is commonly used for short-term loans (car loans, personal loans), some bonds, certificates of deposit (CDs), and basic savings accounts. The formula I = P × R × T is easy to understand and calculate: multiply your principal by the annual interest rate (as a decimal) by the time period in years.

While simple interest is less common than compound interest for long-term investments, it's valuable for understanding basic financial concepts and for situations where interest doesn't accumulate. It's also easier to budget for loans with simple interest since payments remain consistent.

This calculator helps you quickly determine how much interest you'll earn on an investment or owe on a loan, plus the total amount after the interest period. It's perfect for comparing loan offers, planning short-term investments, or understanding the cost of borrowing.

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