Simple Interest Calculator
Enter a principal, rate, and number of years below to instantly get the interest earned.
Total Amount
$1150
Interest earned: $150
The Simple Interest Formula
I = P × r × t
Worked example
$1,000 at 5% annual interest for 3 years.
I = 1000 × 0.05 × 3 = $150
Total amount: 1000 + 150 = $1,150
Frequently Asked Questions
What is the simple interest formula?
Simple interest = principal × rate × time (I = Prt), where rate is the annual rate as a decimal and time is in years.
How is simple interest different from compound interest?
Simple interest is always calculated on the original principal only. Compound interest is calculated on the principal plus any interest already earned, so it grows faster over time.
Where is simple interest actually used?
Some short-term loans, car loans, and certain bonds use simple interest. Most savings accounts and long-term investments use compound interest instead.
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