OmniCalcsSimple Interest Calculator
Find the simple interest earned or owed on any principal, rate and time period.
How to Use This Simple Interest Calculator
Enter the principal amount, the annual interest rate and how long the money is borrowed or invested. Choose years, months or days as the time unit and the calculator returns the interest and the total amount.
- Principal โ the starting amount of money.
- Rate โ the annual percentage rate applied to the principal.
- Time โ converted to years: months are divided by 12 and days by 365.
- Total amount โ principal plus interest.
Practical Example
Suppose you borrow $10,000 at 5% simple interest for 3 years:
- Interest = P ร r ร t = $10,000 ร 0.05 ร 3 = $1,500
- Total to repay = $10,000 + $1,500 = $11,500
Compare: the same $10,000 at 5% compounded annually for 3 years grows to about $11,576 โ compounding adds only $76 here, but the gap widens rapidly over decades.
What Your Results Mean
- Interest โ the amount earned or owed, calculated only on the principal.
- Total amount โ principal plus interest, the full repayment or final value.
Frequently Asked Questions
What is the difference between simple and compound interest?
Simple interest is calculated only on the original principal, while compound interest is also earned on interest that has already accumulated. Over long periods, compound interest grows much faster.
Who uses simple interest?
Simple interest is common for short-term loans, car loans in some markets, and certificates that pay interest without reinvestment. Most savings accounts use compound interest instead.
How are months and days converted?
Months are converted to years by dividing by 12. Days are converted by dividing by 365, the standard convention for annual rates.
Does the total amount include the principal?
Yes. The total amount is the principal plus the simple interest earned or owed.
Why does simple interest grow slower than compound?
With simple interest, the rate is applied to the same original principal every period. With compounding, each period the interest is added to the balance and earns its own interest, creating exponential growth.