Simple Interest Calculator
Calculate simple interest on a principal amount. See total interest, monthly interest, and compare with compound interest.
Formula
I = P × r × t
I = $5,000.00 × 0.0500 × 3
I = $750.00
Total Amount
$5,750.00
Principal
$5,000.00
Total Interest
$750.00
Monthly Interest
$20.83
Simple vs Compound Interest
1yrSimple: $250.00Compound: $255.81
2yrSimple: $500.00Compound: $524.71
3yrSimple: $750.00Compound: $807.36
5yrSimple: $1,250.00Compound: $1,416.79
10yrSimple: $2,500.00Compound: $3,235.05
20yrSimple: $5,000.00Compound: $8,563.20
Frequently Asked Questions
What is simple interest?+
Simple interest is calculated only on the original principal: I = P × r × t. Unlike compound interest, you don't earn interest on accumulated interest. It's commonly used for short-term loans and some bonds.
Simple vs compound interest?+
$5,000 at 5% for 3 years: Simple = $750 interest. Compound (monthly) = $808. The difference grows with time — over 20 years: Simple = $5,000 vs Compound = $8,193.
Where is simple interest used?+
Auto loans, some personal loans, Treasury bills, certificates of deposit (sometimes), and short-term commercial loans typically use simple interest calculations.