Simple Interest
Calculator
Results
- Interest earned
- $100.00
- Total amount
- $1,100.00
Comparison
| Scenario | Principal | Interest earned | Total amount |
|---|---|---|---|
| Start | $1,000.00 | $0.00 | $1,000.00 |
| Maturity | $1,000.00 | $100.00 | $1,100.00 |
Simple-interest projection
| 0 | 1,000.00 | 0.00 | 1,000.00 |
| 1 | 1,000.00 | 50.00 | 1,050.00 |
| 2 | 1,000.00 | 100.00 | 1,100.00 |
Formula
I = P × r × t; A = P + I- P
- 1000.00
- r
- 0.05
- t
- 2
= 1100.00
More in Financial
See all →Frequently asked questions
How is simple interest different from compound interest?+
Simple interest is calculated only on the original principal for the entire term, so it grows in a straight line, while compound interest is calculated on the principal plus any interest already added, so it grows faster over time.
What is the formula the calculator uses?+
It multiplies principal by the interest rate by the time period, expressed as interest equals principal times rate times time, which gives the total interest earned or owed without any compounding effect.
Where is simple interest commonly used in practice?+
It's common in short-term loans, some auto loans, and certain bonds or promissory notes, where interest doesn't compound and instead accrues at a flat, predictable amount each period based only on the original amount borrowed or invested.
Does the time period need to be in years for this calculator?+
The rate and time period need to match — if your rate is an annual rate, time should be expressed in years, including fractional years for partial periods; mixing units, like an annual rate with time in months, will produce an incorrect result.
Why would a lender prefer simple interest over compound interest?+
From a borrower's side, simple interest is usually cheaper overall, so lenders on longer-term products often prefer compounding since it generates more interest income over time on the same principal and rate.