Simple Interest Calculator
The simple interest calculator finds the interest earned or owed on a principal using I = P × R × T. Solve for the interest and total amount, or work backwards to find the principal, the rate or the time when the other numbers are known. Time can be in years, months or days.
The formula
I = P × R × T, where P is the principal, R is the yearly rate as a decimal and T is the time in years. The total amount is A = P + I.
Rearranged: P = I ÷ (R × T), R = I ÷ (P × T) and T = I ÷ (P × R).
Simple versus compound interest
Simple interest is calculated on the original principal only, so it grows in a straight line. Compound interest adds earned interest to the base, so it grows faster. Short-term loans, some bonds and many informal loans use simple interest.
Questions people ask
How do I convert months or days to years?
Divide months by 12, or days by 365. The calculator does this for you when you choose the unit.
Is simple interest ever better for the borrower?
Yes. For the same stated rate and time, simple interest costs less than compound interest.