Interest Calculator
Calculate simple interest on a principal amount over time
About This Calculator
The Interest Calculator calculates simple interest on a principal amount over a specified time period. Simple interest is calculated only on the principal amount, not on previously earned interest. This calculator helps you understand how much interest you will earn or pay on loans and investments.
How It Works
- 1
Enter the principal amount (the initial sum of money).
- 2
Input the annual interest rate as a percentage.
- 3
Enter the time period and select whether it's in years or months.
- 4
The calculator computes the interest amount and total amount (principal + interest).
Formula Explanation
I = P × r × tWhere I is the interest amount, P is the principal, r is the annual interest rate (as a decimal), and t is the time period in years. For months, the time is converted to years by dividing by 12.
A = P + IThe total amount is the sum of the principal and the interest earned.
Tips
Simple interest is different from compound interest - it only calculates on the principal.
For loans, this shows the total interest you'll pay if no payments are made.
For investments, this shows interest earned if interest is not reinvested.
Most savings accounts and loans use compound interest, not simple interest.
Use this for basic calculations or when interest is paid out rather than reinvested.
Common Uses
Loan Interest Calculation
Calculate total interest on loans that use simple interest.
Investment Planning
Estimate interest earned on investments with simple interest.
Educational Purposes
Learn how simple interest works compared to compound interest.
Quick Estimates
Get a quick estimate of interest amounts for financial planning.