Simple Interest Calculator
Calculate simple interest and total amount for loans and investments
Enter Details
Initial amount invested or borrowed
Annual interest rate percentage
Duration in years
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About Simple Interest
What is Simple Interest?
Simple interest is a method of calculating interest on a principal amount where the interest is calculated only on the original principal throughout the entire period. Unlike compound interest, simple interest does not include interest on previously earned interest.
Formula
Simple Interest (SI) = (P × R × T) / 100
Total Amount (A) = P + SI
- P = Principal amount (initial investment or loan)
- R = Annual interest rate (in percentage)
- T = Time period (in years)
Common Uses
- Personal loans and car loans
- Short-term investments
- Certificate of deposits (CDs)
- Treasury bills and bonds
- Quick interest calculations
Example
If you invest $10,000 at an annual interest rate of 5% for 3 years:
SI = (10,000 × 5 × 3) / 100 = $1,500
Total Amount = 10,000 + 1,500 = $11,500
Simple vs Compound Interest
- Simple Interest: Interest calculated only on principal amount
- Compound Interest: Interest calculated on principal + accumulated interest
- Simple interest results in lower returns/costs over time
- Compound interest grows exponentially, simple interest grows linearly