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Simple interest
Principal × rate × time — interest and total, plus the compounding contrast.
CALCULATOR · MONEY · INTEREST
Simple Interest Calculator
Simple interest is the honest kind: $10,000 at 6% for 5 years earns exactly $3,000 — $13,000 total, no compounding curve. Car loans, short CDs, and personal loans often work this way, which is why the number on your statement matches this formula to the penny. Enter any principal, rate, and time (years or months) below — and see what the same money would earn compounded.
The 60-second rule
I = P × r × t. Interest equals principal times the annual rate (as a decimal) times years. $10,000 × 0.06 × 5 = $3,000; total $13,000. Simple interest never earns interest on itself — that is the whole difference from compounding, where the same inputs earn $3,382.26. If your loan’s interest looks bigger than this formula says, you are paying compound interest (or fees) — now you can prove it.
The worked example, line by line
Defaults: I = 10,000 × 0.06 × 5 = $3,000.00; total = 10,000 + 3,000 = $13,000.00.
Branch — $5,000 at 8% for 3 years: 5,000 × 0.08 × 3 = $1,200.00; total $6,200.00. Branch — $2,400 at 5% for 18 months: t = 18/12 = 1.5; 2,400 × 0.05 × 1.5 = $180.00; total $2,580.00.
Output · formula · meaning
| Output | Formula | What it means |
|---|---|---|
| Interest | P × r × t | $3,000.00 at the defaults — what the balance earns (or costs). |
| Total | P + I | $13,000.00 — what you get back or owe at the end. |
| Compounded contrast | P × (1+r)t − P | $3,382.26 — $382.26 more, the price of compounding. |
Who uses this
- Borrowers: checking a car dealer’s or lender’s interest figure against the formula before signing.
- Savers: quick math on short-term CDs and savings promos quoted as simple rates.
- Students: the I = Prt homework problem, verified with real numbers.
- Landlords & lenders: simple-interest notes and owner financing, where the formula is the contract.
Accuracy & limitations
The formula is exact arithmetic — the limits are about when it applies. Most credit cards, mortgages, and savings accounts compound, so this calculator understates their true cost or earnings; the contrast line shows the gap ($382.26 on the defaults). Real loans also add origination fees, late fees, and day-count conventions (30/360 vs actual/365) that move the total a few dollars. Use this for simple-interest products and as a sanity check on everything else.
Cite this calculatorBright Side Kit. “Simple Interest Calculator: I = PRT.” brightoolbox.com, 2026.
Bright Side Kit. "Simple Interest Calculator: I = PRT." https://brightoolbox.com/simple-interest-calculator/ Accessed October 23, 2026.Frequently asked questions
What is the simple interest formula?
I = P × r × t — interest equals principal × annual rate (as a decimal) × time in years. Example: $10,000 × 0.06 × 5 = $3,000. Total owed or earned is P + I = $13,000.
What is the difference between simple and compound interest?
Simple interest is charged only on the original principal; compound interest is charged on the principal plus accumulated interest. $10,000 at 6% for 5 years: simple = $3,000, compounded annually = $3,382.26. The gap grows with time and rate.
When is simple interest used?
Auto loans, many personal loans, short-term CDs, Treasury bills, and some private notes use simple interest (often with daily accrual). Credit cards, mortgages, and savings accounts almost always compound — run the contrast line to see what that costs you.
How do I calculate simple interest for months?
Convert months to years: t = months ÷ 12. $2,400 at 5% for 18 months: t = 1.5, so I = 2,400 × 0.05 × 1.5 = $180.00. The calculator takes months directly.
How do I find the rate or time from the interest?
Rearrange the formula: r = I ÷ (P × t) and t = I ÷ (P × r). Paid $1,200 interest on $5,000 over 3 years? r = 1,200 ÷ 15,000 = 8%.
Is simple interest better for borrowers?
Yes — all else equal, simple interest costs less than compounding because interest never earns interest. That is exactly why lenders compound: the $382.26 gap on the defaults is their extra margin.