Simple Interest Calculator
Enter the principal, the annual interest rate and the time to calculate the simple interest earned.
Espacio publicitario
- Interest earned
- 150
- Total amount
- 1,150
Espacio publicitario
How simple interest is calculated
Unlike compound interest, simple interest is always calculated on the initial principal, without accumulating interest on previous interest.
interest = principal × interest rate ÷ 100 × time
Worked example
A principal of 1000 € at 5% annually for 3 years generates interest of 1000 × 5 ÷ 100 × 3 = 150 €. The total amount is 1000 + 150 = 1150 €.
Frequently asked questions
- How is it different from compound interest?
- Simple interest is calculated only on the initial principal each period, while compound interest also generates interest on accumulated interest.
- Can I use months instead of years for time?
- Enter the time in years; if you have months, divide the number of months by 12 to convert to years.
- Is it useful for calculating loans?
- It can give an idea of total interest for a simple-interest loan, but many loans use compound interest or amortization, so check the exact terms with your lender.
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