--- title: "Simple Interest Calculator | Method Calculator" description: "Calculate simple interest and the total amount using I = P × r × t. Enter the principal, annual rate and time in years, months or days." canonical_url: "https://methodcalculator.com/simple-interest-calculator" meta: "og:description": "Calculate simple interest and the total amount using I = P × r × t. Enter the principal, annual rate and time in years, months or days." "og:image": "https://methodcalculator.com/_og/s/o_fc48d011348457ac.png" "og:image:height": "600" "og:image:type": image/png "og:image:width": "1200" "og:title": "Simple Interest Calculator – Free Online Tool" "twitter:image": "https://methodcalculator.com/_og/s/o_fc48d011348457ac.png" --- > Index of every page on this site: [llms.txt](https://methodcalculator.com/llms.txt) # **Simple Interest Calculator** Find the interest earned or owed when interest is charged only on the original amount. Enter the principal, the yearly rate and the time period in years, months or days. ## **Result** Interest **$600.00**
Total amount (principal + interest)
**$5,600.00**
Time in years
3
Interest per year
$200.00
## What is simple interest? Simple interest is the most basic way to price borrowing or saving: a fixed percentage of the original principal is charged for each unit of time, and interest never earns interest. It is used for many car and personal loans, short-term lending between businesses and as the textbook starting point for understanding how interest works before compounding is introduced. ## Simple interest formula **I = P × r × t** - **I** = interest, **P** = principal - **r** = annual interest rate as a decimal (4% = 0.04) - **t** = time in years (months ÷ 12, days ÷ 365) The total amount owed or earned is **A = P + I = P × (1 + r × t)**. **Example:** $5,000 at 4% for 3 years: I = 5,000 × 0.04 × 3 = **$600**, so the total is $5,600. For 18 months, t = 1.5 and I = $300. For 45 days, t = 45 ÷ 365 = 0.1233 and I = $24.66. ## How to use this calculator 1. Enter the amount borrowed or deposited. 2. Enter the annual rate. If you have a monthly rate, multiply it by 12 first. 3. Enter the period and choose years, months or days. 4. Read the interest and total; the "interest per year" line helps when comparing offers quoted for different periods. ## Simple vs. compound interest With simple interest the balance grows in a straight line; with compounding it curves upward. The gap is small over a year or two and large over decades. Use the [compound interest calculator](https://methodcalculator.com/compound-interest-calculator) for savings and investments, and the [loan calculator](https://methodcalculator.com/loan-calculator) for instalment loans, where the balance falls with each payment. ## **Frequently asked questions ** ### **What is the difference between simple and compound interest?** Simple interest is charged only on the original principal, so the interest amount is the same every period. Compound interest is charged on the principal plus interest already accrued, so it grows faster over time. For $5,000 at 4% over 3 years, simple interest is $600 while annual compounding gives $624.32. ### **Where is simple interest actually used?** Most car loans and many personal loans are "simple interest" loans: interest accrues daily on the outstanding balance and does not compound as long as you pay on time. Short-term loans, bonds that pay fixed coupons and some certificates of deposit also use simple interest. ### **How do I convert months or days to years?** Divide months by 12 and days by 365. Six months is 0.5 years and 90 days is 0.2466 years. Some lenders use a 360-day year for daily interest; this calculator uses 365 days. ### **How do I find the rate or time instead of the interest?** Rearrange the formula: r = I ÷ (P × t) and t = I ÷ (P × r). For example, if $5,000 earned $600 in 3 years, the rate is 600 ÷ (5,000 × 3) = 0.04, or 4% per year. ## **Related calculators ** - [**Compound Interest Calculator**](https://methodcalculator.com/compound-interest-calculator) - [**Loan Calculator**](https://methodcalculator.com/loan-calculator) - [**ROI Calculator**](https://methodcalculator.com/roi-calculator) - [**Credit Card Payoff Calculator**](https://methodcalculator.com/credit-card-payoff-calculator) ```json {"@context":"https://schema.org","@graph":[{"@id":"https://methodcalculator.com/#website","@type":"WebSite","description":"Free online calculators for finance, health and fitness, math and everyday life. 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