Simple Interest Calculator
Calculate simple (non-compounding) interest instantly, with a year-by-year breakdown and a side-by-side comparison to compound interest. Free, no sign-up.
Interest that compounds grows faster over time
See the full year-by-year breakdown in our Compound Interest Calculator
Loan or Investment
See how much more you'd earn if this same rate compounded instead.
Total Amount (Simple Interest)
$12,500.00
Principal $10,000.00 + Interest $2,500.00
At the same rate compounded annually, you'd end up with $12,762.82 — that's $262.82 more in interest than simple interest alone.
Balance Over Time
Notice how the compound line curves upward while the simple interest line stays straight — that gap is the effect of compounding.
Year-by-Year Breakdown
| Year | Simple Balance | Compound Balance |
|---|---|---|
| 0 | $10,000.00 | $10,000.00 |
| 1 | $10,500.00 | $10,500.00 |
| 2 | $11,000.00 | $11,025.00 |
| 3 | $11,500.00 | $11,576.25 |
| 4 | $12,000.00 | $12,155.06 |
| 5 | $12,500.00 | $12,762.82 |
This calculator is for educational purposes and general estimates only — it isn't financial or lending advice. Real loans and accounts often use compounding, fees, and other terms not reflected here. Consult a financial professional before making a financial decision.
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Buy me a coffeeFree Simple Interest Calculator — With a Compound Interest Comparison
Simple interest is the most basic way to calculate interest — it's a fixed percentage of the original principal, charged (or earned) evenly over time, with no interest building on top of interest. Enter your principal, rate, and time period to get the interest and total instantly, plus a year-by-year breakdown. Turn on the comparison toggle to see exactly how much more the same rate would earn if it compounded instead — a natural companion to our Compound Interest Calculator. Everything runs instantly in plain JavaScript, no sign-up required.
The Simple Interest Formula
Simple interest is calculated as I = P × r × t, where P is the principal amount, r is the annual interest rate (as a decimal), and t is the time in years. The total amount owed or earned is simply the principal plus that interest: A = P + I. Because the interest is always calculated on the original principal — never on interest that's already accrued — the balance grows in a straight line over time rather than curving upward.
📏 Grows in a straight line
Simple interest adds the same dollar amount every period, so the balance chart is always a straight line, not a curve.
🏦 Where it's actually used
Some auto loans, short-term personal loans, and certain bonds use simple interest — but most savings accounts and credit cards compound instead.
Simple vs. Compound Interest: The Key Differences
Simple interest only counts the principal
Every period, interest is calculated only on the original amount — past interest earned or charged never itself earns more interest.
Compound interest counts interest-on-interest
Each compounding period, interest is calculated on the current balance (principal + all interest so far), which is why compound growth accelerates over time.
The gap grows with time
Over a short period the two are close, but the longer the time horizon, the bigger the advantage compounding provides — this is the entire premise behind long-term investing.
Why students learn simple interest first
It's the foundational formula that makes compound interest easier to understand — once you see I = P × r × t, adding compounding on top makes intuitive sense.
Both still show up in real finance
Simple interest is common in short-term lending and some bonds; compound interest dominates savings accounts, credit cards, and most long-term investing.
Frequently Asked Questions
What is the simple interest formula?
I = P × r × t, where P is the principal, r is the annual interest rate as a decimal, and t is the time in years. The total amount is the principal plus that interest.
What's the difference between simple and compound interest?
Simple interest is always calculated on the original principal only. Compound interest is calculated on the principal plus any interest already accrued, so the balance grows faster over time — the longer the period, the bigger the difference.
Where is simple interest actually used?
It shows up in some short-term personal and auto loans, certain bonds, and basic finance education. Most savings accounts, credit cards, and mortgages use compound interest instead.
How do I convert months or days into years for this formula?
Divide months by 12, or days by 365, to get the time in years. This calculator handles that conversion automatically when you select months or days as your time unit.
Can this calculator handle a loan I'm paying off, not just an investment?
The math works the same way for a loan (interest owed) as it does for an investment (interest earned) — just enter your loan's principal, rate, and term to see the total interest charged.
See the Full Power of Compounding
For a detailed year-by-year compound growth breakdown with contributions, try the Compound Interest Calculator.
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