Our free Simple Interest Calculator helps you quickly work out how much interest you’ll pay (or earn) on a loan, deposit, or investment using the simple interest formula.
With just three inputs — Principal, Rate, and Time — you can calculate:
Interest amount (how much you owe/earn)
Total amount payable (Principal + Interest)
Annual, monthly, or daily interest breakdown
Unlike compound interest, simple interest does not “grow on itself” — it is charged only on the original principal. This makes it easier to calculate, but less profitable for savings and more predictable for borrowers.
Our calculator is useful for:
✅ Students learning the interest formula in math or finance
✅ Borrowers estimating loan repayments without compounding
✅ Investors comparing fixed deposits or bonds
✅ Lenders calculating expected returns
The formula for simple interest is straightforward:
SI = (P × R × T) ÷ 100
Where:
P = Principal (amount borrowed or invested)
R = Annual interest rate (%)
T = Time period (in years)
Example: If you borrow $1,000 at 5% for 2 years:
SI = (1000 × 5 × 2) ÷ 100 = $100.
Total = $1,100.
Q: What is the difference between simple and compound interest?
Simple interest is calculated only on the original principal.
Compound interest is calculated on the principal plus accumulated interest.
Q: Is simple interest better for loans or savings?
For borrowers, simple interest is cheaper because interest doesn’t compound.
For savers, compound interest is usually better because it grows faster.
Q: Can I calculate monthly or daily interest?
Yes — just convert time into years:
Months ÷ 12 = years
Days ÷ 365 = years
Q: Do banks use simple interest?
Most modern banks use compound interest. Simple interest is often used in short-term loans, auto loans, or educational contexts.