Simple Interest Calculator

Calculate simple interest using the formula I = P × R × T. Solve for interest, principal, rate, or time instantly.

Simple interest calculator I = P × R × T
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Frequently asked questions
What is simple interest? ›
Simple interest is calculated only on the original principal, not on accumulated interest. Formula: I = P × R × T, where I is the interest amount, P is the principal, R is the annual interest rate (as a decimal), and T is the time in years. Simple interest is used for short-term loans, car loans, and some personal loans.
What is the difference between simple and compound interest? ›
Simple interest is calculated only on the original principal. Compound interest is calculated on the principal plus any previously earned interest. Over time, compound interest produces significantly more growth (or debt). Most savings accounts and mortgages use compound interest. Short-term loans often use simple interest.
Where is simple interest commonly used? ›
Simple interest is commonly used for: auto loans, short-term personal loans, Treasury bills and notes, certificates of deposit (CDs), and some student loans. It is also used in everyday situations like calculating interest on a savings bond for a specific period or estimating the cost of a short-term bridge loan.
How do I convert between daily, monthly, and annual rates? ›
To convert an annual rate to a monthly rate, divide by 12. To convert to a daily rate, divide by 365. For example, 6% annual = 0.5% monthly = 0.01644% daily. When using the simple interest formula, make sure your time (T) matches your rate period — if using an annual rate, T should be in years.

About this simple interest calculator

Our simple interest calculator can solve for any of the four variables in the formula I = P × R × T. Choose what you want to find (interest earned, principal, rate, or time), enter the other three values, and get your answer instantly with the formula shown.

Simple vs. compound interest in the real world

Most modern financial products use compound interest, which is why the distinction matters. When shopping for savings accounts, always look for compound interest (ideally compounded daily). When taking out loans, simple interest loans can actually save you money if you pay off the loan early, since interest does not compound on itself.