Simple interest calculator with a compound comparison
Enter the principal, the annual rate and the number of years. $10,000 at 5% simple interest for 3 years earns $1,500, for a total of $11,500; with annual compounding it would be $11,576.25.
Inputs used by this calculator
Simple Interest Calculator uses the fields below. The starting values reproduce the page example; replace them with values from the same units and time period before using the result.
| Input | Starting example | Accepted value | How it is used |
|---|---|---|---|
| Starting principal | 10,000 | 0 or greater | Supplies the starting principal quantity used by the published equation or result breakdown. |
| Annual rate (%) | 5 | 0 to 100 | Supplies the annual rate (%) quantity used by the published equation or result breakdown. |
| Years | 3 | 0 to 200 | Supplies the years quantity used by the published equation or result breakdown. |
The simple interest formula
Simple interest is the principal times the annual rate times the time in years. It is charged only on the original principal, so each year adds the same amount.
I = P × r × ttotal = P + ISimple versus compound interest
With compound interest, interest is added to the balance and earns interest itself. Over short periods the two are close; over long periods compounding pulls ahead. $10,000 at 5% grows to $20,000 in 20 years with simple interest but to about $26,533 with annual compounding.
Where simple interest is used
Simple interest describes bond coupons paid on face value, some short-term loans and many classroom problems. Loans that charge interest daily on the remaining balance behave like simple interest between payments, because the interest is not added to the principal.
Time in months or days
Express the time in years: 18 months is 1.5 years and 90 days is about 0.25 years. Some lenders use a 360-day year and others 365 days, which changes daily interest slightly.
Solving for the rate or the time
Rearranging the formula finds the other pieces: the rate is I ÷ (P × t) and the time is I ÷ (P × r). For example, $600 of interest on $5,000 over 2 years is a 6% rate.
What the model leaves out
Fees, taxes, inflation and changing rates are not included. For savings with regular deposits, use the Savings Calculator; for compounding at different frequencies, use the Compound Interest Calculator.
$10,000 at 5%: simple versus compound
| Time | Simple interest total | Compounded yearly |
|---|---|---|
| 1 year | $10,500.00 | $10,500.00 |
| 3 years | $11,500.00 | $11,576.25 |
| 5 years | $12,500.00 | $12,762.82 |
| 10 years | $15,000.00 | $16,288.95 |
| 20 years | $20,000.00 | $26,532.98 |
Frequently asked questions
What is the simple interest formula?
I = P × r × t, with the rate as a decimal and time in years.
How much is 5% simple interest on $10,000 for 3 years?
$1,500, for a total of $11,500.
What is the difference between simple and compound interest?
Compound interest earns interest on previous interest; simple interest does not.
How do I use months instead of years?
Divide the months by 12 and enter the result as years.
How do I find the interest rate?
Divide the interest by principal times time.
Do car loans use simple interest?
Many charge interest on the remaining balance; check your loan agreement.
Which grows faster over 20 years?
Compound interest, by a wide margin at the same rate.
What to keep in mind
No compounding, fees, tax or inflation are included.
Results are rounded for display in US format, with money in dollars and cents; CSV exports keep full calculation precision. This is a calculation summary, not an official certificate.