Simple Interest Calculator

Simple interest is the most straightforward way to calculate the cost of borrowing or the return on a deposit — interest accrues only on the original principal, never on previously accumulated interest. This calculator finds the total interest earned or owed, the final amount, and the effective rate for the period. It supports years, months, and days as time units, automatically converting to the annual rate for you. Simple interest is commonly applied to short-term personal loans, some car loans, and certain savings accounts. Understanding it helps you compare offers quickly and verify that the stated rate matches what you will actually pay or receive. Unlike compound interest — where previously earned interest itself begins earning interest — simple interest grows in a perfectly straight line, making it easy to predict and verify at any point during the loan or deposit term without a complex formula. This predictability makes it particularly transparent for consumer lending and a useful educational starting point for anyone learning how interest calculations work in practice.

Simple interest is calculated with the formula I = P × R × T, where I is the interest earned, P is the principal (the original loan or deposit amount), R is the annual interest rate expressed as a decimal (e.g. 5% becomes 0.05), and T is the time period in years. The total amount returned or owed is then P + I. Unlike compound interest, the interest is always calculated on the original principal only — it never earns interest on itself. When you enter time in months, the calculator divides by 12 to convert to years; when you enter days, it divides by 365. The effective rate for the period shows how much of the principal was earned as interest across the entire duration, giving you a simple way to compare different time spans at a glance.