🧮 Simple Interest Calculator

The no-frills interest sum: what a lump sum earns when interest never compounds.

How it works

Simple interest is the oldest, plainest way of charging or paying for money. You earn the same slice every single year, worked out as Interest = P × r × t — principal times the yearly rate times the number of years. The final amount is A = P × (1 + r × t).

Because the interest itself never earns anything, growth is a straight line rather than a curve. You will still meet simple interest on some short-term loans, bonds between coupon dates, and plenty of school maths problems — and it is a handy baseline for judging whether a compound deal is actually good.

An example

Put $10,000 away at 6% simple interest for 5 years. Each year pays 6% of the original $10,000, which is $600 — never a cent more. Over 5 years that adds up to $3,000 of interest, giving a total of $13,000. Compare that with compounding, where year two would already pay interest on $10,600 instead of $10,000 and the gap would widen every year after.

Common questions

Where is simple interest actually used?

Mostly on short-term lending, some car loans, and interest owed between bond payment dates. Mortgages and savings accounts almost always use compound interest instead.

Why is the result lower than compound interest?

With simple interest your earnings sit idle. Compound interest puts those earnings back to work, so over long periods it pulls well ahead even at the same rate.

Can I use this for a loan instead of savings?

Yes — the maths is identical. The interest figure is what the borrower pays on top of the amount borrowed, assuming no repayments are made along the way.

Related calculators

This calculator gives estimates for learning. Rates, taxes and rules change, and your lender or the IRS has the final numbers — check big decisions against the real documents.