Simple Interest Calculator

I = P × R × T, where P is the principal, R the yearly interest rate as a decimal (5% = 0.05) and T the time in years. The total amount A = P + I. Rearranged, R = I ÷ (P × T), T = I ÷ (P × R) and P = I ÷ (R × T). For example, 10,000 at 5 percent for 3 years earns 10,000 × 0.05 × 3 = 1,500, so the total is 11,500.

The rate is always per year, so shorter periods are converted to years: 18 months is 1.5 years, and 90 days is 90 ÷ 365 years. Some banks and money markets count a year as 360 days instead (the banker's year or Actual/360), which makes the interest for the same number of days slightly higher: 90 days is then exactly 0.25 years. Choose the convention your lender uses.

With compound interest, the interest earned is added to the principal and itself earns interest, so the balance grows faster each year. Over short periods the difference is small; over long periods it becomes large. 10,000 at 5 percent for 3 years earns 1,500 with simple interest but 1,576.25 with yearly compounding. The calculator shows both so you can see the difference for your numbers; for savings and long loans, use the Compound Interest Calculator.

A 5,000 loan at 8 percent for 6 months: I = 5,000 × 0.08 × 0.5 = 200, so 5,200 is repaid. A 2,000 deposit that earned 90 in 9 months: R = 90 ÷ (2,000 × 0.75) = 0.06, or 6 percent a year. To earn 600 at 4 percent on 5,000: T = 600 ÷ (5,000 × 0.04) = 3 years. And to earn 1,000 in 2 years at 5 percent you need P = 1,000 ÷ (0.05 × 2) = 10,000. Choose the matching option in the calculator to check each one.

Simple interest is common for short-term personal and car loans in some countries, certificates of deposit and bonds that pay interest out rather than reinvesting it, late-payment charges, and some student loans while in school. Many mortgages and credit cards, by contrast, charge interest on the outstanding balance each month, which works differently — use the Mortgage or EMI calculator for those.