Simple interest
Interest that never compounds.
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% / year
years
Interest earned
$1,500.00
Total of $11,500.00
- Total amount
- $11,500.00
- Same period, compounded monthly
- $11,614.72
- Compounding gains you
- $114.72
How it works
Simple interest is charged only on the original amount. It shows up in short-term loans, some bonds and plenty of school homework.
Interest = Principal × Rate × Time
Example: 10,000 at 5% for 3 years earns 1,500 of interest, for a total of 11,500.
Questions people ask
How is it different from compound interest?
Compound interest also earns interest on the interest already added. Over long periods that difference becomes enormous.
Can I use months instead of years?
Yes — enter a fraction of a year. Six months is 0.5.
Where is simple interest actually used?
Short-term personal loans, some car finance, late-payment charges and many exam questions.
Related calculators
Compound interestGrowth with monthly deposits and compounding.
Savings goalHow much to put aside each month.
Interest-only paymentThe monthly cost when nothing is repaid.
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