Interest Calculator
Calculate simple interest from a principal, an annual rate and a time period, and see the closing balance it produces.
Total interest
$1,500.00
Simple interest over 3 years
Closing balance
$11,500.00
Interest per year
$500.00
- Principal
- $10,000.00
- Rate per year
- 5%
- Time (years)
- 3
- Interest per month (average)
- $41.67
- Total at maturity
- $11,500.00
How this was calculated
- 1.Simple interest is charged on the original principal only, never on interest already earned.
- 2.I = P × r × t = $10,000.00 × 0.0500 × 3.
- 3.I = $1,500.00, giving a closing balance of $11,500.00.
For interest that itself earns interest, use the compound interest calculator.
How the interest calculation works
Simple interest is the most basic form of interest: a fixed percentage of the original amount for each period. It never compounds, so the interest earned in year two is identical to year one.
It is common on short-term loans, car finance quoted on a flat-rate basis, and some bonds. Most savings accounts and credit cards use compound interest instead, which produces a higher figure.
Worked example
$10,000 at 5% simple interest for three years.
- →I = 10,000 × 0.05 × 3
- →I = 1,500
Answer: $1,500 of interest, for a total of $11,500.
Interest FAQs
When is simple interest used instead of compound?
Short-term and flat-rate loans, some government bonds and simple savings products. Any account that pays interest on interest is compounding.
How do I handle part-years?
Enter the term in years with decimals — nine months is 0.75 years. The tool multiplies by that fraction directly.
Is simple interest better for a borrower?
Usually yes, for the same quoted rate. Compounding adds interest on unpaid interest, so the true cost is higher.
Interest Calculator is part of the financial calculators collection on Calcora, alongside 8 other tools. Results are calculated in your browser and are for information only — see our disclaimer.
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