Simple Interest Calculator
Calculate simple interest, total amount and compare with compound interest quickly.
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Frequently Asked Questions
What is the simple interest formula?
Simple Interest = Principal × Rate × Time (in years). For example: $10,000 × 8% × 5 years = $4,000 in interest. Total amount = $14,000. Simple interest is used in short-term loans, car loans and some savings accounts.
Simple interest vs compound interest — what is the difference?
Simple interest is calculated only on the principal. Compound interest is calculated on the principal plus accumulated interest. $10,000 at 8% for 10 years: simple interest = $8,000 total interest; compound interest = $11,589. The gap grows enormously over time.
When is simple interest used?
Simple interest is used for most auto loans, some personal loans, US Treasury bills and short-term loans. Mortgages, savings accounts, credit cards and most long-term investments use compound interest. Knowing which applies affects how you calculate true cost or return.