Enter a principal amount, annual interest rate and length of time to calculate simple interest and the resulting total balance. Compare different rates and time periods to see how the numbers change.
Simple interest is calculated only on the original principal.
The interest amount grows in a straight line because previously earned interest is not added to the principal.
Principal and time remain unchanged while the annual interest rate varies.
| Annual Rate | Principal | Time | Simple Interest | Ending Balance |
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With simple interest, each additional year adds the same amount of interest when principal and rate remain unchanged.
| Time Period | Principal | Annual Rate | Total Interest | Ending Balance |
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Simple interest is calculated using the original principal, the annual interest rate and the amount of time the money is borrowed or invested.
Unlike compound interest, previously accumulated interest is not added to the principal for future interest calculations.
Principal is the original amount of money. If you borrow $10,000, the $10,000 is the principal used in the simple-interest formula.
The rate is converted from a percentage to a decimal before it is used in the formula. A 6% annual rate becomes 0.06.
The standard simple-interest formula expresses time in years. This calculator automatically converts months or days into a fraction of a year when those units are selected.
With simple interest, the original principal stays unchanged for purposes of calculating interest. With compound interest, previously accumulated interest can become part of the balance used for later interest calculations.
Actual financial products may use different day-count conventions, accrual methods, fees or compounding rules. Check the terms of the specific account or loan you are evaluating.
Simple interest is interest calculated using the original principal rather than a balance that includes previously accumulated interest.
The standard formula is I = P × r × t, where I is interest, P is principal, r is the annual interest rate expressed as a decimal, and t is time expressed in years.
First calculate the simple interest, then add it to the original principal. Total amount = principal + interest.
Simple interest is based on the original principal. Compound interest can be calculated on both principal and previously accumulated interest.
Yes. Months can be converted into years by dividing the number of months by 12. This calculator performs that conversion automatically.
Yes. This calculator converts days into years using 365 days per year. Some financial contracts may use a different day-count convention.
Yes, when principal and the annual rate remain unchanged. Because interest is based only on the original principal, each full year adds the same dollar amount of interest.
No. Financial products can use different interest and accrual methods. Review the specific loan or account agreement to understand how interest is actually calculated.