Simple Interest Calculator
Calculate simple interest, total amount, or find the missing variable - principal, rate, or time.
💰 What is Simple Interest?
Simple interest (SI) is the most basic form of calculating the cost of borrowing or the return on an investment. It is computed solely on the original principal amount for the entire duration of the loan or investment, regardless of whether interest has been paid or accumulated along the way. Because the base never changes, the interest earned or owed in each period is identical - hence the word "simple."
Simple interest is used in many real-world financial products. Short-term personal loans from certain institutions, some auto loans, certain government securities, and simple investment products like treasury bills often use simple interest. It is also the basis for calculating pro-rated interest on bank accounts for partial periods, and it forms the starting point for understanding more complex interest calculations like compound interest.
The three variables in simple interest are the principal (P), the annual interest rate (R), and the time period (T). Given any two of these and the resulting interest, you can always solve for the third. This calculator handles all four scenarios: finding SI given P, R, T; finding P given SI, R, T; finding R given P, SI, T; and finding T given P, SI, R.
The key distinction between simple and compound interest is that simple interest's base never grows - each period's interest is calculated on the same original principal. Compound interest calculates each period's interest on the growing balance (principal + accumulated interest). Over short periods, the difference between the two is minimal. Over long periods, compound interest produces dramatically higher totals, which is why long-term investments and loans almost always use compound interest.