Simple Interest Calculator

Simple interest is calculated only on the original principal for the entire time period (I = P × r × t) — it never compounds, meaning you don't earn or pay interest on previously accumulated interest. Compound interest, by contrast, recalculates interest on the growing balance at each period, producing a larger total over time for the same rate. Use our Compound Interest Calculator if your loan or investment actually compounds.

Some short-term loans, certain bonds, and some promotional financing (like store credit "no interest for 12 months" offers) use simple interest — but most mortgages, credit cards, and savings accounts use compound interest instead, so check your specific loan or account terms to know which formula actually applies.

Simple interest's mathematical simplicity is exactly the point — it's a direct multiplication of principal, rate, and time with no compounding periods or exponents involved, which is why it was historically easier to calculate by hand before calculators and computers became common.

No — you can enter fractional years (like 0.5 for six months, or 2.5 for two and a half years) since the formula scales linearly with time; there's no requirement for whole-year periods the way some compounding calculations require.