Simple interest is interest calculated only on the original amount, the principal, never on interest already earned. This simple interest calculator applies the classic formula I = P × R × T and shows the interest, the total amount to repay or receive, and the interest per year and per month.
Enter the time in years, months or days; for days you can choose a 365-day year or the 360-day year used by some banks. It is ideal for short-term loans, car loans with flat interest, bonds, fixed deposits that pay out interest, and school maths homework.
How to use the Simple Interest Calculator tool
- Enter the principal, the amount borrowed or invested.
- Enter the interest rate per year.
- Enter the time and choose years, months or days.
- Read the interest and the total amount, with the formula worked out below.
Why use ToolOrca Simple Interest Calculator
- Interest, total amount, yearly and monthly interest
- Time in years, months or days
- 365-day or 360-day year for daily interest
- Year-by-year table for longer terms
- Worked I = PRT formula
- Any currency symbol
Simple interest formula and example
The formula is I = P × R × T, where I is the interest, P the principal, R the annual rate as a decimal and T the time in years. The total amount is A = P + I, or A = P(1 + RT).
Worked example: $5,000 at 5% for 3 years gives I = 5,000 × 0.05 × 3 = $750, so the total is $5,750. For months, divide by 12: 18 months is 1.5 years. For days, divide by 365 (or 360): $5,000 at 5% for 90 days earns 5,000 × 0.05 × 90 ÷ 365 = $61.64.
To find the rate when you know the interest, rearrange the formula: R = I ÷ (P × T). Earning $750 on $5,000 over 3 years means R = 750 ÷ 15,000 = 5%.
Simple versus compound interest
With simple interest the balance grows by the same amount every year. With compound interest it grows faster each year because interest is added to the balance. Over 3 years the difference is small, but over 20 years $5,000 at 5% earns $5,000 simple interest compared with about $8,266 compounded yearly. Results here are for information only, not financial advice.
Frequently asked questions
What is the simple interest on $10,000 at 6% for 2 years?
10,000 × 0.06 × 2 = $1,200, giving a total of $11,200.
How do I calculate simple interest for months?
Divide the months by 12 to get years. ₹50,000 at 9% for 8 months is 50,000 × 0.09 × 8 ÷ 12 = ₹3,000.
What is the 360-day year?
Some banks and bond markets count a year as 360 days, which slightly increases daily interest. 90 days at 5% on $5,000 is $61.64 on a 365-day basis but $62.50 on a 360-day basis.
Is simple interest better for borrowers?
For the same rate, yes: simple interest never charges interest on interest. But a flat-rate loan that charges simple interest on the full original amount for the whole term can cost more than a reducing-balance loan at a lower-looking rate.