Simple Interest Calculator

Calculate simple interest on loans or savings with our quick and accurate online tool

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How to Use the Simple Interest Calculator

  • Enter the principal amount — the original sum of money.
  • Type in the annual interest rate as a percentage.
  • Specify the time duration in years or months.
  • Select the time unit (months or years).
  • Click "Calculate" to see the total interest and amount.

What Is Simple Interest?

Simple interest is the amount you earn or owe on a principal sum over time at a fixed interest rate. It’s straightforward and doesn’t compound — making it easy to estimate your returns or payments on loans and deposits.

Simple Interest Formula

Formula: I = (P × R × T) / 100

  • I = Simple Interest
  • P = Principal Amount
  • R = Annual Interest Rate (%)
  • T = Time Period (in years)

If you choose months, the time is automatically converted to years (e.g., 6 months = 0.5 years).

Why Use This Simple Interest Tool?

Our calculator saves time and ensures accuracy. Whether you're a student learning interest calculations or a borrower checking repayments — it's a useful financial tool that works on any device.

Where Is Simple Interest Commonly Used?

Simple interest is often used in everyday financial situations where calculations are straightforward and time-bound. You’ll typically find it applied in:

  • Personal loans – Banks and lenders use it for short-term, fixed-rate loans.
  • Savings accounts with fixed terms – Some basic savings products calculate interest using the simple interest method.
  • Fixed deposits or certificates of deposit (CDs) – Especially when the term is short and the interest doesn’t compound.
  • Educational settings – Students often use simple interest formulas for school exams or finance-related assignments.
  • Business planning – Companies may estimate short-term borrowing costs or returns using simple interest.

Frequently Asked Questions

How is simple interest calculated?

Simple interest is calculated using the formula: I = (P × R × T) / 100, where P is principal, R is annual rate, and T is time in years.

What is the difference between simple and compound interest?

Simple interest is calculated only on the original amount. Compound interest includes interest on previous interest too.

Can I use this calculator for monthly interest?

Yes. Just select "Months" as your time unit, and the tool will convert it to the right yearly fraction.

Is this useful for loan or savings planning?

Definitely. It's great for getting a quick estimate of interest you'll earn or owe on fixed-rate plans.