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
Loan / Investment Details
Enter your principal, rate, and time
Interest Growth Over Time
Interest Breakdown
Interest earned per time period
Per Year
$500
Per Month
$42
Per Day
$1
How Simple Interest is Calculated
Understanding the I = P x R x T formula
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
See how different rates affect your earnings
| Rate | Interest | Total | Monthly 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 |
What if the rate was different?
See how different interest rates affect your earnings
Personalized Insights
1 insight based on your inputs
Simple vs Compound
With compound interest, you'd earn $1,576 instead of $1,500. Consider compound interest for long-term savings.
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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).
Interest Results
Total Interest
$1,500
Total Amount
$11,500
Principal + Interest