Skip to content
Lizely

Simple Interest Calculator

Calculate flat, non-compounding interest on a principal in seconds.

Privacy: your files never leave your device. All processing happens locally in your browser.

How to use

  1. 1.Enter the principal — the starting loan or deposit amount in dollars.
  2. 2.Enter the annual interest rate as a percentage (for example, 5 for 5%).
  3. 3.Enter the time in years (whole numbers or fractions like 1.5), then read the interest earned and total (principal + interest) instantly.

About Simple Interest Calculator

The Simple Interest Calculator works out the interest charged on a loan or earned on a deposit using the classic formula I = P · r · t — where P is the principal, r is the annual interest rate as a decimal, and t is the time in years. Type in your principal, an annual rate, and a term (whole years or fractions like 1.5), and the calculator instantly shows the interest earned and the total amount (principal plus interest). Everything runs locally in your browser, so nothing you enter is uploaded.

The defining feature of simple interest is that it does NOT compound. Interest is calculated only on the original principal for the entire term — earned interest is never added back to the balance to generate further interest. That makes the interest grow in a straight line: at 5% on $1,000 you earn exactly $50 every year, whether it is year one or year ten. This is the opposite of compound interest, where each period's interest is folded into the balance and starts earning interest of its own, producing exponential growth. For the same principal, rate, and term, simple interest always yields the same or less total interest than compound interest.

Simple interest shows up in the real world more often than people expect. Many short-term personal loans, car loans, some auto financing, promotional store credit, US Treasury and corporate bond coupon payments, and bridge loans are quoted on a simple-interest basis. Understanding it helps you compare a simple-interest loan against a compounding one, sanity-check a lender's numbers, or estimate the coupon income from a fixed-rate bond. Because the math is linear, you can also reason about it quickly: double the time and you double the interest; halve the rate and you halve it.

Worked example: borrow $2,500 at 6.5% for 1.5 years. Interest = 2500 × 0.065 × 1.5 = $243.75, so you repay $2,743.75 in total. Enter those numbers above and you will see the same figures. Try setting the rate or time to zero to confirm the interest drops to $0 and the total equals the principal — a useful edge case when a promotional period is interest-free.

When you want interest that itself earns interest — savings accounts, most mortgages, credit cards, and long-term investments — reach for the compound interest calculator or savings calculator instead. Those model the exponential growth that this tool deliberately leaves out. The figures here are estimates for general information only and are not financial advice.

Methodology & sources

Interest is computed with the standard simple-interest formula I = P · r · t, where P is the principal, r = annualRatePct ÷ 100, and t is the time in years; the total is P + I. Simple interest is charged only on the original principal and does NOT compound, so interest grows linearly with time (the per-year interest is constant). Assumptions: a single lump-sum principal with no additional deposits or withdrawals, a fixed annual rate, and time measured in years (fractions allowed). Zero rate or zero time yields zero interest; negative principal, rate, or time is rejected. These estimates are for general information only and are not financial advice — verify figures with a licensed professional.

Frequently asked questions

What is the simple interest formula?
Simple interest uses I = P · r · t, where P is the principal, r is the annual rate written as a decimal (5% = 0.05), and t is the time in years. The total you owe or receive is the principal plus that interest, P + I.
How is simple interest different from compound interest?
Simple interest is charged only on the original principal, so it never compounds — the interest earned each year stays flat. Compound interest adds each period's interest back to the balance, so future interest is calculated on a growing amount, producing exponential rather than linear growth. For the same inputs, simple interest always totals the same or less than compound interest.
What happens if I set the time or rate to zero?
If either the time or the rate is zero, the interest is $0 and the total equals the principal, because no interest accrues. The calculator handles these edge cases exactly and never returns a negative or invalid figure.

Related tools

Finance Calculators guides

View all