Simple interest calculatorSimple interest calculator: estimate interest on principal
Calculate interest on an unchanged principal with I = P * r * t. For $1,000 at 5% over 3 years, interest is $150 and principal plus interest is $1,150. A $5,000 balance at 6% for 4.5 years earns $1,350, including $150 for the final half-year. The table assumes no repayments, new deposits, fees, or compounding. Many simple-interest loans instead calculate interest on a declining outstanding balance, so this fixed-principal calculation is not their repayment schedule.
Total interest
$150
$50 per year on $1,000
Final amount
$1,150
Interest per year
$50
Year-by-year interest table
| Year | Interest this year | Interest so far | Total |
|---|---|---|---|
| Year 1 | $50 | $50 | $1,050 |
| Year 2 | $50 | $100 | $1,100 |
| Year 3 | $50 | $150 | $1,150 |
How to use
- 1
Enter the principal — the amount earning interest.
- 2
Set the annual rate and the term in years (fractions allowed).
- 3
Read the total interest and the final amount side by side.
- 4
Use the year-by-year table to see interest accrue evenly — the signature of simple interest.
- 5
Compare against the compound interest calculator to feel the difference compounding makes.
Benefits
The simplest interest, clarified
Short-term loans and some bonds use simple interest — know exactly what it costs.
Fractional years welcome
Handles 2.5-year terms precisely, not just whole years.
Contrast with compounding
The even yearly accrual makes the compound curve's acceleration obvious.
Student-friendly
The formula every finance class starts with, shown and explained.
How it works
- P
- Principal — the starting lump sum
- r
- Annual rate, as a decimal (5% = 0.05)
- t
- Time in years (fractions allowed)
- I
- Total interest earned over the whole term
Interest I = P × r × t, where P is the principal, r is the annual rate as a decimal (5% = 0.05), and t is the time in years. Total amount A = P + I. Interest accrues only on the original principal — earned interest never earns more interest. Fractional years are supported: a 4.5-year term produces four full-year rows plus a partial row worth half a year's interest. A 0% rate or 0-year term produces zero interest by definition.
Worked example
$1,000 at 5% for 3 years earns $150 of interest for a $1,150 total — exactly $50 a year, because interest accrues only on the original principal.
Understanding your results
Interest is calculated on the original principal for the entered time, without compounding or repayments. The total is principal plus that interest. Installment loans that accrue interest on a declining balance need a repayment schedule model instead.
Sources and methodology
These resources explain related concepts. They do not certify or endorse this calculator. See the assumptions and worked example above.
- Simple and precomputed auto-loan interest — CFPB ↗
Distinguishes interest on an outstanding balance from precomputed interest.
Frequently asked questions
$150 of interest, for a $1,150 total. Each year earns exactly $50 (1,000 × 0.05), so the year-by-year table shows $1,050, $1,100, then $1,150. The yearly interest never changes because it is always calculated on the original $1,000.
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Open calculatorFigures are estimates for education only — not financial advice. Results depend on the assumptions you enter. Read the full disclaimer.