Simple Interest Calculator
Calculate simple interest quickly. Enter your principal, rate, and time to find the interest earned and total amount.
Interest Earned
$150.00
Total Amount
$1,150.00
How It Works
This calculator uses the simple interest formula:
I = P × R × T
- P — Principal (the initial amount)
- R — Annual interest rate (as a decimal, so 5% = 0.05)
- T — Time period in years
The total amount you receive back is the principal plus the interest: Total = P + I.
Frequently Asked Questions
What is simple interest?
Simple interest is calculated only on the original principal amount. Unlike compound interest, it does not include interest earned on previously accumulated interest. It is commonly used for short-term loans and some types of bonds.
What is the simple interest formula?
The formula is I = P × R × T, where I is the interest earned, P is the principal amount, R is the annual interest rate (as a decimal), and T is the time in years. The total amount is P + I.
When is simple interest used instead of compound interest?
Simple interest is typically used for short-term loans, car loans, and some personal loans. Compound interest is more common for savings accounts, credit cards, and long-term investments.