Simple Interest Calculator
Calculate simple interest, principal, rate, or time using the formula I = P x R x T. Get instant results with visual breakdown.
Results
Simple Interest
$1,500
$11,500
Total Amount
Principal
Interest
Principal
$10,000
Interest
$1,500
Rate
5%
Time
3 years
Formula Used
I = P x R x T
I = $10,000 x 0.05 x 3 = $1,500
Understanding Simple Interest
Simple Interest Formula
I = P x R x T
Where I is interest, P is principal (initial amount), R is annual interest rate (as decimal), and T is time in years.
Total Amount Formula
A = P + I = P(1 + RT)
The total amount is the principal plus interest. This is what you'll have at the end of the investment period or owe at the end of a loan.
Simple vs Compound Interest
Simple: I = PRT | Compound: A = P(1+r)^t
Simple interest is calculated only on the principal. Compound interest is calculated on principal plus accumulated interest, growing faster over time.
Frequently Asked Questions
Simple interest is a method of calculating interest where the interest is computed only on the original principal amount. The formula is I = P x R x T, where I is interest, P is principal, R is the annual interest rate (as a decimal), and T is time in years. Unlike compound interest, simple interest does not add earned interest back to the principal.
Simple interest is calculated only on the original principal amount, while compound interest is calculated on the principal plus any previously earned interest. Over time, compound interest grows faster because you earn "interest on interest." Simple interest is commonly used for short-term loans and car loans, while compound interest is typical for savings accounts and credit cards.
To calculate simple interest manually, use the formula I = P x R x T. First, convert the interest rate from a percentage to a decimal (divide by 100). Then multiply the principal by the rate by the time in years. For example, $10,000 at 5% for 3 years: I = $10,000 x 0.05 x 3 = $1,500 in interest. The total amount would be $11,500.
Simple interest is commonly used for car loans, short-term personal loans, some mortgages, treasury bills, and certificates of deposit. It's often preferred for short-term borrowing because the interest charges are straightforward and don't compound over time, making it easier to predict total costs.