Simple Interest Calculator
Calculate simple interest with I = P × r × t, and see what compounding would have added. For a loan quoted at a flat rate, see the monthly instalment and the reducing-balance rate it equals.
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How do I calculate simple interest?
Simple interest is principal × rate × time: I = P × r × t, with the yearly rate as a decimal and time in years. 10,000 at 5% for 3 years earns 1,500, for a total of 11,500. Interest is paid on the principal only, never on earlier interest, and months are divided by 12.
- Enter the principal, the amount borrowed or invested.
- Enter the yearly interest rate and the time, in years or months.
- Read the interest, the total and the interest per year.
Formulas & Methods
Simple interest
Example: 10,000 × 0.05 × 3 = 1,500
Total amount
Example: 10,000 + 1,500 = 11,500
Time in months
Example: 18 months = 1.5 years: 10,000 × 0.05 × 1.5 = 750
Key features
Years or months
Enter the time in either unit; months are converted exactly.
Interest, total and per year
See the interest, the final amount and how much interest each year adds.
Compared with compounding
See what the same money would grow to if interest were compounded once a year instead.
Flat-rate loans decoded
For a loan quoted at a flat rate, see the monthly instalment and the reducing-balance rate it really equals.
Common uses
- Check what a loan quoted at a flat rate really costs
- Work out interest on a short-term deposit or note that pays simple interest
- Homework and exam questions on I = Prt
Simple vs compound interest
Simple interest grows by the same amount every year, because it is always calculated on the original principal. Compound interest is added to the balance and then earns interest itself, so it grows faster over time.
10,000 at 5% for 10 years earns 5,000 in simple interest, but 6,288.95 when compounded once a year. Savings accounts usually compound, so use the Compound Interest Calculator for those.
What does a flat interest rate really cost?
Some car, personal and consumer loans are quoted at a flat rate: simple interest on the full amount for the whole term, split into equal monthly instalments. Because you keep paying interest on money you have already repaid, a flat rate costs far more than the same number on a reducing-balance loan, the kind most bank quotes and the EMI Calculator use.
100,000 at a flat 12% for one year is 12,000 interest and 12 instalments of 9,333.33. A reducing-balance loan with those instalments has a rate of about 21.5% a year. Over five years the gap is similar: a flat 9% on 500,000 means 12,083.33 a month, the same as about 15.7% reducing. Tick the flat-rate box under a result to see this for your own numbers, and compare offers by the reducing-balance rate.
Frequently Asked Questions
How do I find the rate from the interest?
Rearrange the formula: r = I ÷ (P × t). 1,500 interest on 10,000 over 3 years is 1,500 ÷ 30,000 = 0.05, so 5% a year.
How do I use months instead of years?
Choose Months: the calculator divides the months by 12. For 9 months at 5% a year, t is 0.75, so 10,000 earns 375.
Is simple interest better than compound interest?
For a saver, compound interest earns more at the same rate. For a borrower it depends on how the loan is repaid: a flat-rate loan uses simple interest but charges it on the original amount throughout, so it usually costs more than a reducing-balance loan at the same quoted rate.
How long until the interest reaches a target?
Divide the interest you want by the interest per year: t = I ÷ (P × r). To earn 2,000 on 10,000 at 5%, t = 2,000 ÷ 500 = 4 years.
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