Simple Interest Calculator

Calculate the interest earned on your principal amount without compounding. Perfect for loans, bonds, and basic savings planning.

USA ($) Mode

Principal Amount

1K1M

Interest Rate (P.A.)

0.1%8%

Annual Interest Rate

Time Period

Years

1Y30Y

Total Amount

$11,350

Principal Amount$10,000

Total Interest$1,350

Return Breakdown

What is Simple Interest?

Simple Interest is the most basic way to calculate the cost of borrowing money or the return on an investment. As the name suggests, the interest is calculated only on the principal amount.

Unlike compound interest, the interest you earn does not get added back to the principal to earn more interest. This means your returns remain constant year after year (Linear Growth).

[Image of simple interest vs compound interest graph]

The Standard Formula

SI = (P × R × T) ÷ 100

Total = P + SI

SI = Simple Interest Amount
P = Principal (Original Amount)
R = Rate of Interest per annum (%)
T = Time Period (in Years)

Linear Growth

Your money grows by the exact same amount every year. If you earn $500 in Year 1, you will earn $500 in Year 10.

Predictability

Because the math is simple, it is easy to predict exactly how much you will owe or earn at the end of the term.

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Frequently Asked Questions

What is Simple Interest?

Simple Interest (SI) is a method of calculating interest where the interest is charged only on the original principal amount. Unlike Compound Interest, interest on interest is not calculated.

What is the formula for Simple Interest?

The standard formula is SI = (P × R × T) / 100. Where P is Principal, R is Rate of Interest per year, and T is Time in years.

How is it different from Compound Interest?

In Simple Interest, your returns are linear (constant every year). In Compound Interest, your returns grow exponentially because you earn interest on your past interest.

Where is Simple Interest used?

It is commonly used for short-term personal loans, car loans (in some regions), and specific types of bonds or certificates of deposit (CDs) that pay out interest rather than reinvesting it.

Disclaimer: This tool provides estimates based on the Simple Interest formula. Actual returns may vary slightly due to rounding or specific bank policies on leap years.