Simple Interest Calculator: Formula and Examples

Work out simple interest on a loan, deposit or investment in seconds. Enter the principal, the yearly interest rate and the time in years.

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Simple interest formula

Simple interest = principal × rate × time ÷ 100. For example, 10,000 at 8% for 3 years earns 10,000 × 8 × 3 ÷ 100 = 2,400 in interest, so the total is 12,400.

Simple vs compound interest

Simple interest is charged only on the original amount. Compound interest is also charged on interest already added, so it grows faster: the same 10,000 at 8% for 3 years earns 2,597 with yearly compounding. Most savings accounts, deposits and loans compound; see the compound interest calculator.

Frequently asked questions

Where is simple interest used?

It is used for some short-term loans, informal lending, bonds that pay fixed interest, and many school and exam questions.

How do I calculate simple interest for months?

Convert the months to years: 6 months is 0.5 years and 18 months is 1.5 years.