Finance
Simple Interest Calculator
Calculate simple interest, future value, and investment growth over time
How to Use
Simple Interest Calculator estimates the flat rate return on an investment or loan. Unlike compound interest, simple interest is calculated only on the original principal.
This formula is commonly used for short-term loans, certificate of deposits, and flat-rate retail financial instruments.
FAQs
What is simple interest?
Simple interest is a quick method of calculating the interest charge on a loan or investment, calculated solely on the principal amount.
What is the simple interest formula?
The formula is Interest = Principal × Rate (%) × Time (in years). The total future value is the Principal plus the Interest.
How does simple interest differ from compound interest?
Simple interest is calculated only on the principal amount, while compound interest is calculated on the principal plus any accumulated interest from previous periods.
How to Use the Simple Interest Calculator
Calculate interest that accrues only on the original principal.
- Enter the principal.
- Enter the annual interest rate.
- Enter the time period in years.
- See the interest and final amount.
Simple Interest Formula
Simple Interest
P is principal, r is annual rate (decimal), t is years.
Example:
Input: $5,000 at 6% for 3 years
Calculation: 5,000 × 0.06 × 3
Result: $900 interest
Real-World Use Cases
Short-Term Loans
Many car and personal loans quote simple interest.
Fixed Deposits
Some deposits pay simple, not compound, interest.
Tips
Tips
- Compound interest grows faster than simple interest over time.
- Match the rate and time units (both per year).