Simple Interest
How much interest will I pay or earn on a fixed amount?
Simple interest is charged only on the original amount, never on past interest. It's the easiest way to see how a percentage rate turns into real dollars.
How to use this calculatorShowHide
- Step 1: Enter the amount being borrowed or saved.
- Step 2: Enter the yearly interest rate and how long the money is borrowed or saved.
- Step 3: See how much interest that adds up to, and the total paid back.
What you'll need
- The amount
- The yearly interest rate
- How long (in days, months or years)
Don't know a number? Leave the example value in, or tap the ⓘ next to it. New to this? Read the Beginner's Guide →
Interest
$150.00
Borrowing or lending $1,000.00 at 5% simple interest for 3 years earns $150.00 in interest, for a total of $1,150.00. Interest is charged only on the original amount — it never compounds.
- Total (principal + interest)
- $1,150.00
- Time in years
- 3 years
- Interest per year
- $50.00
What this means
In plain English
With simple interest, you pay (or earn) a percentage of the original amount only — the interest never earns interest of its own. It's the simplest way to see how a percentage rate turns into real dollars.
When to use it
- Understanding what "5% a year" really means in dollars
- Some car loans, short-term loans and bonds
- Quick checks before learning about compound interest
Example
Borrow $1,000 at 5% a year for 3 years.
Each year's interest is 5% of $1,000 = $50. Over 3 years that's $150.00 of interest, so you'd pay back $1,150.00 in total.
Watch out for
The 360-day year. Some lenders treat a year as 360 days instead of 365, which quietly makes the interest about 1.4% higher. On a $100,000 loan at 8% for 90 days, that's $2,000.00 instead of $1,972.60.
The math (optional)
Interest = Principal × Rate × Time (often written I = P × r × t)
- P — the original amount
- r — the yearly rate as a decimal (5% → 0.05)
- t — time in years (months ÷ 12, or days ÷ 365 or 360)