Simple Interest Calculator

Calculate simple interest on loans or investments. See how your money grows with our free simple interest calculator with detailed breakdowns.

Interest Results

Total Interest

$1,500

Total Amount

$11,500

Principal + Interest

Principal$10,000
Interest Rate5% per year
Time Period3 years
Effective Rate15.00%

Loan / Investment Details

1,000100,000
%
0.130

Interest Growth Over Time

Principal
Interest

Interest Breakdown

Per Year

$500

Per Month

$42

Per Day

$1

How Simple Interest is Calculated

Simple Interest Formula:

I = P × R × T

I = Interest earned

P = Principal (initial amount)

R = Annual interest rate (as decimal)

T = Time (in years)

Your Calculation:

I = $10,000 × 0.0500 × 3.0000 years

I = $1,500

Total Amount Formula:

A = P + I

A = $10,000 + $1,500 = $11,500

Interest Rate Comparison

RateInterestTotalMonthly Interest
2%$600$10,600$17/mo
4%$1,200$11,200$33/mo
6%$1,800$11,800$50/mo
8%$2,400$12,400$67/mo
10%$3,000$13,000$83/mo
12%$3,600$13,600$100/mo

Quick Answer

Simple interest is calculated only on the original principal using the formula I = P × R × T, where I is interest, P is principal, R is annual rate (as decimal), and T is time in years. Unlike compound interest, simple interest does not earn interest on interest. Calculate instantly at practicalwebtools.com.

Key Facts

  • Simple interest formula: I = P × R × T (Principal × Rate × Time)
  • Interest is calculated only on original principal, not accumulated interest
  • Common for short-term loans, car loans, and some bonds
  • Simple interest grows linearly; compound interest grows exponentially
  • $10,000 at 5% simple interest for 3 years = $1,500 interest
  • Total amount = Principal + Interest = P × (1 + RT)
  • Auto loans often use simple interest calculation

Frequently Asked Questions

Simple interest is calculated only on the original principal amount. Unlike compound interest, simple interest doesn't earn interest on previously earned interest. The formula is I = P × R × T, where P is principal, R is annual interest rate, and T is time in years.
Simple interest is calculated only on the principal, while compound interest is calculated on the principal plus accumulated interest. Over time, compound interest grows faster. Simple interest grows linearly; compound interest grows exponentially.
Simple interest is commonly used for short-term loans, car loans, some personal loans, certificates of deposit (CDs), Treasury bills, and calculating interest for partial periods. It's simpler to calculate and often used for periods under a year.
Convert the time period to years: for months, divide by 12; for days, divide by 365. Then use the formula I = P × R × T. For example, 6 months = 0.5 years, 90 days ≈ 0.247 years.
The effective interest rate shows the total percentage return over the entire period. For simple interest, it's the annual rate multiplied by time. A 5% annual rate for 2 years gives a 10% effective rate (total interest earned relative to principal).