Simple Interest
Calculate flat, non-compounding interest — principal times rate times time. It's the model used for many short-term loans, bonds and back-of-the-envelope estimates.
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Worked example
Interest: $750.00 · Total: $5,750.00
How it’s solved
Worked on the example above, step by step — follow along and you can do it on paper next time, no tool required.
- Simple interest is charged only on the original principal — it grows in a straight line, never on past interest.
- Interest = principal × rate% × years
$5,000.00 × 5% × 3 = $750.00 - Total owed = principal + interest
$5,000.00 + $750.00 = $5,750.00
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Inputs
- Principal $
5000 - Rate %/yr
5 - Years
3
Frequently asked
How does simple interest differ from compound?
Simple interest is charged only on the original principal, never on accumulated interest, so it grows in a straight line.
What's the formula?
Interest = principal × (rate ÷ 100) × years.