Simple Interest Calculator
Simple interest pays only on the original principal and never reinvests itself. That makes it the easiest interest calculation to verify by hand — and the right model for most short-term loans, bonds and treasury bills.
Interest
$900.00
- Total (principal + interest)
- $5,900.00
- Interest per year
- $300.00
Values update as you type. This calculator covers the single scenario its formula assumes — see Common Mistakes for what it leaves out.
The formula this calculator uses
I = P x r x t
- I
- Interest earned or owed
- P
- Principal — the original amount
- r
- Annual interest rate as a decimal (6% = 0.06)
- t
- Time in years (90 days = 90/365 = 0.2466 years)
- A
- Total amount, P + I
How to check the result by hand
- 1
Write the principal down as a plain number
Strip currency symbols and thousands separators. $5,000 becomes 5000. This is where spreadsheet imports most often fail, because a value pasted with its currency symbol arrives as text.
- 2
Convert the annual percentage to a decimal
Divide by 100: 6% becomes 0.06. If the quote is a monthly rate instead, multiply by 12 to annualize before using t in years — or keep the rate monthly and switch t to months. Never change only one of the two.
- 3
Express time in years
Three years stays 3. Nine months is 9 / 12 = 0.75. Ninety days is 90 / 365 = 0.24658 under actual/365, or 90 / 360 = 0.25 under actual/360. Check which convention the agreement uses.
- 4
Multiply the three numbers
I = P x r x t. For $5,000 at 0.06 for 3 years: 5000 x 0.06 x 3 = $900. Because interest is linear here, a one-year figure can also be scaled — $300 a year times three years gives the same $900.
- 5
Add principal back for the total
A = P + I gives what changes hands at the end: $5,000 + $900 = $5,900. If payments were made along the way, subtract them from this total rather than from the interest figure.
For worked examples, common mistakes and the limits of this formula, read the full How To Calculate Simple Interest page.