Simple Interest Calculator Calculate interest on loans, savings, or investments — with clear formulas, real-world example...
Simple Interest Calculator
Calculate interest on loans, savings, or investments — with clear formulas, real-world examples, and educational insights.
Formula**:
$$I = P \times r \times t$$
$$A = P + I = P(1 + rt)$$
Where: • $P$ = principal • $r$ = annual interest rate (decimal) • $t$ = time in years • $I$ = interest • $A$ = total amount
Example**:
- $10,000 @ 5% for 3 years: $I = 10{,}000 \times 0.05 \times 3 = \$1{,}500$ $A = 10{,}000 + 1{,}500 = \$11{,}500$
- $5,000 @ 12% for 6 months: $t = 0.5$, $I = 5{,}000 \times 0.12 \times 0.5 = \$300$
✅ Pro Tip**: Simple interest is *linear* — double the time = double the interest. Unlike compound interest, it never earns “interest on interest.”
⚠️ Watch for these misuses:
- “Simple interest” auto loans that actually compound** — read amortization schedules!
- Late fees >2% per month** — may violate usury laws (check state limits)
- 360-day year without disclosure** — inflates daily rate by 1.4%
- No written agreement** — oral simple-interest contracts are hard to enforce
✅ When It’s Legitimate**:
- Car title loans (short-term)
- Treasury Bills (T-bills)
- Some personal/family loans (documented in a promissory note)
- Interest-only mortgages (during IO period)
| Instrument | Rate | $10K for 1 yr |
|---|---|---|
| HYSA Savings | 4.50% APY* | $450 (compound) |
| Treasury Bill | 4.80% (simple) | $480 |
| Personal Loan | 12.0% (simple) | $1,200 |
| Late Fee (typical) | 1.5%/mo | $1,800/yr |
*HYSA uses compound interest — shown for contrast. Simple interest always yields *less* over time than compounding at same nominal rate.
📉 Accrual Math**:
- Actual/365**: $10K @ 6% for 90 days = $10{,}000 × 0.06 × 90/365 = **$147.95**
- 30/360**: $10K @ 6% for 90 days = $10{,}000 × 0.06 × 90/360 = **$150.00**
➡️ Standard
Find interest, total, or solve for missing variable (rate, time, principal).
➡️ Loan vs. Investment
Compare what you *pay* (loan) vs. what you *earn* (savings) on same $ and term.
➡️ Accrual Options
Model daily interest (T-bills, late fees) with 365 vs. 360-day conventions.
You’ll get:
- Exact interest and total
- Daily/monthly accrual amount
- SVG principal vs. interest bar
Note: Assumes no compounding. For compound interest, use our Compound Interest Calculator.