Simple Interest Calculator
Calculate simple interest using the formula I = P × r × t.
Calculator
Interest earned
$1,200
Total value
$6,200
What is simple interest?
Simple interest is calculated only on the original principal. The formula is I = P × r × t, where P is principal, r is annual rate, and t is time in years.
Example
$5,000 at 6% simple interest for 4 years earns $1,200 in interest.
Money-saving tips
- •Most car loans and personal loans use simple interest.
- •Simple interest is cheaper than compound interest for borrowers.
- •Ask lenders whether interest is simple or compound before signing.
Common mistakes
- •Assuming all loans use simple interest — credit cards use compound interest.
Financial definitions
- Principal
- The original amount borrowed or invested.
Frequently asked questions
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Estimated reading time: 3 min