Simple Interest Calculator

Checked 15 October 2026. What was checked. How these pages are maintained.

Simple interest formula

Interest = principal × rate × time. Amount = principal + interest. Rate is the annual percent as a decimal. Time is in years. $8,000 at 6% for 3 years is $1,440 interest and $9,440 total.

Simple interest does not add earned interest back into the balance. Most savings accounts and many credit cards use compound interest instead. Use this page for simple-interest loans, some auto notes, and textbook problems.

Worked example

$5,000 at 6% simple interest for 18 months: interest = 5000 × 0.06 × 1.5 = $450, total $5,450. Compound interest on the same numbers is a little higher because interest earns interest.

Many personal loans quote a simple or precomputed finance charge. Credit cards do not; they compound. This page is the simple formula only.

Interest that does not earn interest

$8,400 at 9 percent simple interest for 9 months uses time as 0.75 years. Interest = 8,400 × 0.09 × 0.75 = $567. The amount at the end is $8,967. There is no monthly balance to update. The $567 does not itself earn 9 percent partway through the nine months. That is the whole difference from compound interest.

The same principal at 9 percent compounded monthly for 0.75 years would finish a little higher, because each month’s interest joins the balance. Use the compound interest calculator for a savings account, a GIC that compounds, or a credit card. Use this page when the note literally says simple interest, or when a finance charge was precomputed as principal × rate × time.

Months have to become years first

Eighteen months is 1.5 in the time box, not 18. Typing 18 applies the annual rate eighteen times and multiplies the interest by twelve versus the year and a half you meant. Six months is 0.5. A 90-day note is 90 ÷ 365 = 0.2466 years if the contract uses a 365-day year, or 90 ÷ 360 = 0.25 if it uses a 360-day bank year. This page will not pick the day count. A lender’s agreement does.

The same dollars, compounded, are a different page

$8,400 at 9 percent simple for a full year is 8,400 × 0.09 = $756 of interest, total $9,156. There is still no second step. Compounded monthly, the balance would be updated twelve times and the interest would be a bit more than $756, because month two earns interest on month one’s interest. That is not a reason to type 12 in the time box here. Time stays in years. If the note you are reading says the interest is added to the balance each month, close this page and use compound interest. If the note says one finance charge computed up front, stay here. Mixing the two labels on a car worksheet is how a buyer agrees to a total that neither formula produced.

Common questions