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Simple Interest Calculator

$5,000 at 4% for 5 years earns $1,000 of interest, for a final amount of $6,000. Simple interest is charged or earned only on the original principal — the interest itself never earns interest — which makes the math linear: I = P × r × t, so doubling the time or the rate exactly doubles the interest.

Total interest
$1,000
Final amount
$6,000
Principal
$5,000
You earn 20% on the principal over 5 years
A flat $1,000 with no interest-on-interest — a compounding account would earn more over the same time.
Inputs
$ at % for years
The interest is a flat line, not a curve
Simple interest adds the same $200 every year (principal × rate), so doubling the 5 years exactly doubles the interest. There is no interest-on-interest here.
Most real accounts don't work this way
Simple interest genuinely applies to some bonds, short-term promissory notes, and a few auto loans. Savings accounts and credit cards compound, so this understates both the growth you'd earn and the debt you'd owe.
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Uses your inputs above
$1,000 total interest. Want to try a variation?

The math

Reviewed 2026
Formula
I = P · r · t
I interest · P principal · r rate · t years
No compounding

Related calculators

Compound Interest
Savings goal
ROI

Example: how simple interest is calculated

Step-by-step with default inputs

Suppose you put the default values into Simple Interest Calculator:

Principal
$5,000
Annual rate
4%
Years
5 yr

Plug those into the formula I = P · r · t and the result is:

Total interest
$1,000

How to calculate simple interest by hand

  1. Convert the rate to a decimal: 4% → 0.04.
  2. Multiply the principal by the rate for one year's interest: $5,000 × 0.04 = $200.
  3. Multiply by the number of years: $200 × 5 = $1,000 total interest.
  4. Add the principal for the final amount: $5,000 + $1,000 = $6,000.

How does the simple interest calculator work?

The calculator applies the textbook simple interest formula described in the Investopedia reference: I = P · r · t, principal times the annual rate (entered as a percent, divided by 100) times the number of years. The final amount is principal plus interest. Nothing compounds — interest never joins the base that earns more interest, which is precisely what separates this from compound growth and why the two diverge more the longer the term runs. It is the right model for simple-interest-calculator notes and quick linear estimates, and a deliberate under-estimate for accounts that compound.

References: Investopedia: Simple Interest.

Last reviewed July 2, 2026 · Editorial policy

Frequently asked questions

What is the difference between simple and compound interest?

Simple interest is earned only on the principal; compound interest is also earned on prior interest. At 4% for 5 years, $5,000 earns $1,000 simple but about $1,083 compounded annually — and the gap widens with time and rate.

How much interest does $5,000 earn at 4% simple interest?

$200 per year, so $1,000 over 5 years. Because the formula is linear, each year adds exactly the same $200 no matter how much has already accrued.

Is simple interest ever more than compound interest?

No — at the same positive rate, compound interest matches simple interest for the first period and pulls ahead every period after, because its base keeps growing. The two are equal only at time zero, after one period, or at a 0% rate.

What does this calculator assume?

No compounding See the math card above for the full list.

How accurate is this simple interest calculator?

The math is deterministic — the same inputs always produce the same output, and the formula is shown above. Accuracy of the answer for your situation depends on how well your inputs match reality and how well the formula models the question.

Why is my bank's number different?

Banks add fees, taxes, insurance, and product-specific terms that this calculator deliberately omits to keep the math transparent. Use this to sanity-check a quote, not to replace it.