Reviewed by CalcMulti Editorial Team·Last updated: ·← Percentage & Ratio Hub
Simple interest is calculated only on the original principal, not on accumulated interest. The formula is I = P × r × t, where P is the principal, r is the annual interest rate (as a decimal), and t is the time in years. The total amount after the period is A = P + I = P(1 + rt).
Simple interest is used for short-term loans, certain savings accounts, US Treasury bills, and consumer credit calculations. It is simpler than compound interest but grows more slowly over time — interest does not compound on itself.
Example: $5,000 invested for 3 years at 4% per year. Interest = 5000 × 0.04 × 3 = $600. Total = $5,600. With compound interest at the same rate, the total would be $5,000 × 1.04³ = $5,624.32 — $24.32 more.
I = P × r × t | A = P(1 + rt)
I = P × r × t
This calculator is for educational purposes only and does not constitute professional advice. Results are based on standard mathematical formulas. Always verify critical calculations with a qualified professional before making important decisions.