Simple Interest Calculator

How to use this calculator

1. Choose what you want to work out: Balance, Principal, Term or Rate.
2. Fill in the other three. Each one is the answer on its own tab and a question on the rest.
3. Set the period beside the rate and the term — a rate quoted per month against a term in years is a real combination, and the calculator normalises both.
4. Press Calculate to see the end balance, the interest, and the arithmetic written out.

What simple interest is

Simple interest is charged only on the original principal, never on interest already accrued. Because the base never changes, the interest is the same amount every period and the balance grows in a straight line. That makes it easy to predict, which is why it turns up on many short-term and fixed-term arrangements.

It is also why every variable here is as easy to solve for as any other. Nothing compounds, so the formula stays linear and rearranges in one step — which is what the four tabs are.

The formula

The interest is a single multiplication, and the balance simply adds it back to the principal:

I = P × r × t, and B = P + I

• I — the interest earned or owed
• P — the principal, your starting amount
• r — the interest rate as a decimal (3% = 0.03)
• t — the time, in the same unit the rate is quoted per

That last point is the one people get wrong. A 0.25% monthly rate over 10 years is not 0.25 × 10 — it is 3% a year over 10 years, twelve times as much. Both values are converted to years before anything is multiplied.

A worked example

Put $20,000 at 3% a year for 10 years. The interest is 20,000 × 0.03 × 10 = $6,000, so the balance ends at $26,000 — 77% of it the money you started with.

Because nothing compounds, it is the same $600 every single year — 20,000 × 0.03 — however long the term runs. That flat step is what the schedule and the straight-line graph are showing.

Simple vs. compound — why the term matters

Over that 3-year loan, interest compounded annually would add about $788 instead of $750 — a small gap. Stretch the same $5,000 at 5% to 30 years and simple interest totals $7,500, while annual compounding earns about $16,610. The longer the horizon, the more compounding pulls ahead — which is why it is the friend of savers and the cost of long-term debt.

Rearranging the formula — the four tabs

Because B = P(1 + r · t) links four values, knowing any three gives the fourth. Each tab is that same equation solved a different way:

• Balance: B = P × (1 + r × t)
• Principal: P = B ÷ (1 + r × t)
• Term: t = (B ÷ P − 1) ÷ r
• Rate: r = (B ÷ P − 1) ÷ t

Two of those divide, which is why they have answers the others do not: at a 0% rate no term ever reaches a higher balance, and in no time at all no rate gets anywhere. The calculator says so rather than returning a number, and it will not solve a term or a rate from an end balance below the principal — simple interest only ever adds.

Where simple interest is used

Simple interest is common on short-term and fixed personal loans, many car loans, and some bonds, where interest is figured on the original balance. Savings accounts and most long-term investments compound instead, so their interest earns interest — a difference that is minor over months but enormous over decades.

For savings and long-term investments where interest compounds, use the compound interest calculator, or compare both methods side by side in the interest calculator. This tool is for estimation and is not financial advice.