Simple Interest Calculator (2024)

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The Simple Interest Calculator calculates the interest and end balance based on the simple interest formula. Click the tabs to calculate the different parameters of the simple interest formula. In real life, most interest calculations involve compound Interest. To calculate compound interest, use the Interest Calculator.

Simple Interest Calculator (1)

  • Balance
  • Principal
  • Term
  • Rate

Results

End Balance: $26,000.00
Total Interest: $6,000.00

Calculation steps:

Total Interest =$20000 × 3% × 10
=$6,000.00
End Balance =$20000 + $6,000.00
=$26,000.00

Balance Accumulation Graph

Schedule

YearInterestBalance
1$600.00$20,600.00
2$600.00$21,200.00
3$600.00$21,800.00
4$600.00$22,400.00
5$600.00$23,000.00
6$600.00$23,600.00
7$600.00$24,200.00
8$600.00$24,800.00
9$600.00$25,400.00
10$600.00$26,000.00

RelatedInterest Calculator | Compound Interest Calculator

What is Simple Interest?

Interest is the cost you pay to borrow money or the compensation you receive for lending money. You might pay interest on an auto loan or credit card, or receive interest on cash deposits in interest-bearing accounts, like savings accounts or certificates of deposit (CDs).

Simple interest is interest that is only calculated on the initial sum (the "principal") borrowed or deposited. Generally, simple interest is set as a fixed percentage for the duration of a loan. No matter how often simple interest is calculated, it only applies to this original principal amount. In other words, future interest payments won't be affected by previously accrued interest.

Simple Interest Formula

The basic simple interest formula looks like this:

Simple Interest = Principal Amount × Interest Rate × Time

Our calculator will compute any of these variables given the other inputs.

Simple Interest Calculated Using Years

You may also see the simple interest formula written as:

I = Prt

In this formula:

  • I = Total simple interest
  • P = Principal amount or the original balance
  • r = Annual interest rate
  • t = Loan term in years

Under this formula, you can manipulate "t" to calculate interest according to the actual period. For instance, if you wanted to calculate interest over six months, your "t" value would equal 0.5.

Simple Interest for Different Frequencies

You may also see the simple interest formula written as:

I = Prn

In this formula:

  • I = total interest
  • P = Principal amount
  • r = interest rate per period
  • n = number of periods

Under this formula, you can calculate simple interest taken over different frequencies, like daily or monthly. For instance, if you wanted to calculate monthly interest taken on a monthly basis, then you would input the monthly interest rate as "r" and multiply by the "n" number of periods.

Simple Interest Examples

Let's review a quick example of both I=Prt and I=Prn.

I = Prt

For example, let's say you take out a $10,000 loan at 5% annual simple interest to repay over five years. You want to know your total interest payment for the entire loan.

To start, you'd multiply your principal by your annual interest rate, or $10,000 × 0.05 = $500.

Then, you'd multiply this value by the number of years on the loan, or $500 × 5 = $2,500.

Now that you know your total interest, you can use this value to determine your total loan repayment required. ($10,000 + $2,500 = $12,500.) You can also divide the value to determine how much interest you'd pay daily or monthly.

I = Prn

Alternatively, you can use the simple interest formula I=Prn if you have the interest rate per month.

If you had a monthly rate of 5% and you'd like to calculate the interest for one year, your total interest would be $10,000 × 0.05 × 12 = $6,000. The total loan repayment required would be $10,000 + $6,000 = $16,000.

What Financial Instruments Use Simple Interest?

Simple interest works in your favor as a borrower, since you're only paying interest on the original balance. That contrasts with compound interest, where you also pay interest on any accumulated interest. You may see simple interest on short-term loans.

For this same reason, simple interest does not work in your favor as a lender or investor. Investing in assets that don't offer compound growth means you may miss out on potential growth.

However, some assets use simple interest for simplicity — for example bonds that pay an interest coupon. Investments may also offer a simple interest return as a dividend. To take advantage of compounding you would need to reinvest the dividends as added principal.

By contrast, most checking and savings accounts, as well as credit cards, operate using compound interest.

Simple Interest Versus Compound Interest

Compound interest is another method of assessing interest. Unlike simple interest, compound interest accrues interest on both an initial sum as well as any interest that accumulates and adds onto the loan. (In other words, on a compounding schedule, you pay interest not just on the original balance, but on interest, too.)

Over the long run, compound interest can cost you more as a borrower (or earn you more as an investor). Most credit cards and loans use compound interest. Savings accounts also offer compounding interest schedules. You can check with your bank on the compounding frequency of your accounts.

Compound Interest Formula

The basic formula for compound interest is:

A = P × (1 +
r
n
)nt

In this formula:

  • A = ending balance
  • P = Principal balance
  • r = the interest rate (expressed as a decimal)
  • n = the number of times interest compounds in a year
  • t = time (expressed in years)

Note that interest can compound on different schedules – most commonly monthly or annually. The more often interest compounds, the more interest you pay (or earn). If your interest compounds daily, you'd enter 365 for the number of time interest compounds annually. If it compounds monthly, you'd input 12 instead.

Learn More About Compound Interest

Compound interest calculations can get complex quickly because it requires recalculating the starting balance every compounding period.

For more information on how compound interest works, we recommend visiting our compound interest calculator.

Which is Better for You: Simple or Compound Interest?

As a borrower, paying simple interest works in your favor, as you'll pay less over time. Conversely, earning compound interest means you'll net larger returns over time, be it on a loan, investment, or your regular savings account.

For a quick example, consider a $10,000 loan at 5% interest repaid over five years.

As established above, a loan this size would total $12,500 after five years. That's $10,000 on the original principal plus $2,500 in interest payments.

Now consider the same loan compounded monthly. Over five years, you'd repay a total of $12,833.59. That's $10,000 of your original principal, plus $2,833.59 in interest. Over time, the difference between a simple interest and compound interest loan builds up exponentially.

Simple Interest Calculator (2024)

FAQs

What is $770 at 4.1% for 3 years? ›

Therefore, after 3 years, $770 will become $92.63 when invested at an annual interest rate of 4.1%.

What is the simple interest on $3370 borrowed for 30 months at 12 %? ›

So, the simple interest on $3,370 borrowed for 30 months at 12% is $1,608. The explanation behind the formula is that the interest is calculated based on the initial amount borrowed (or invested), the interest rate applied annually, and the duration for which the money is borrowed or invested.

How do you find simple interest questions and answers? ›

Simple Interest Question 1 Detailed Solution
  1. Given: Principal (P) = 3000. Rate (R) = 10% Time (T) = 2 years.
  2. Concept: Simple Interest (SI) = P × R × T.
  3. Calculation: ⇒ Simple Interest = Rs 3000 × 10/100 × 2. ⇒ Simple Interest = Rs 600.
  4. ∴ The simple interest is Rs 600.

How do you calculate the total simple interest you will get? ›

Simple Interest Formula

Simple interest is calculated with the following formula: S.I. = (P × R × T)/100, where P = Principal, R = Rate of Interest in % per annum, and T = Time, usually calculated as the number of years.

What is $1,800 at 6.5% for 30 months? ›

Expert-Verified Answer

The required simple interest earned on the account is given as $292.5.

What is $880 at 5.25 for 2 years? ›

So, for the $880 at 5.25% for 2 years, the interest would be I = 880 * 5.25/100 * 2 = $92.40. The $675 at 3.5% for 4 years would calculate to be I = 675 * 3.5/100 * 4 = $94.50. Finally, the $770 at 4.1% for 3 years would be I = 770 * 4.1/100 * 3 = $94.71.

What is the simple interest on $8000 for 4 years at 2% per annum? ›

Answer. So, the simple interest on 8000 naira for 4 years at a rate of 2% per annum is 160 naira.

What is 13000 borrowed at 5.8% simple interest for 10 years? ›

Answer and Explanation:

= 5.8% * $13,000 * 10. = $7,540.

How much is $10,000 at 10% interest for 10 years? ›

If you invest $10,000 today at 10% interest, how much will you have in 10 years? Summary: The future value of the investment of $10000 after 10 years at 10% will be $ 25940.

What is the sum of money amounts to rs 28000 in 2 years at 20 simple interest per annum? ›

Answer: Required sum of money is 20000 rupees.

What is simple formula for simple interest? ›

The formula for simple interest is SI = P × R × T / 100, where SI = simple interest, P = principal amount, R = the interest rate per annum, and T = the time in years. To calculate the simple interest (SI), multiply the principal amount by the interest rate and the time in years, and then divide it by 100.

What sum of money will amount to 992 at 4 in 6 years? ›

The sum of money will amount to rs 992 at 4% in 6 years is Rs. 783.99.

What is the formula for total interest? ›

To start, you'd multiply your principal by your annual interest rate, or $10,000 × 0.05 = $500. Then, you'd multiply this value by the number of years on the loan, or $500 × 5 = $2,500. Now that you know your total interest, you can use this value to determine your total loan repayment required.

What is the formula for interest? ›

The formula for calculating simple interest is: Interest = P * R * T. P = Principal amount (the beginning balance). R = Interest rate (usually per year, expressed as a decimal). T = Number of time periods (generally one-year time periods).

How to calculate the total amount? ›

In its simplest form, total amount is the sum of two or more numbers. It represents the combined value of individual quantities. For example, if we have amounts A, B, and C, the total amount would be A + B + C.

How do you calculate interest on 3 years? ›

To calculate simple interest, the formula used is (P x r x t)/100 where P, r, and t stands for principal amount, rate of interest and tenure of the deposit in years.

How do you calculate interest over 3 years? ›

Thus, if simple interest is charged at 5% on a $10,000 loan that is taken out for three years, then the total amount of interest payable by the borrower is calculated as $10,000 x 0.05 x 3 = $1,500. Interest on this loan is payable at $500 annually, or $1,500 over the three-year loan term.

How do you calculate compound interest over 3 years? ›

For example, if you have an investment that earns 5% compound interest and you want to know how much money you'll have after 3 years, you would plug the following values into the formula: A = P(1 + r/n)^nt. A = 1000(1 + 0.05/1)^3. A = 1000(1.05)^3.

What is $675 at 3.5 for 4 years? ›

So, for the first account with $880 at 5.25% for 2 years, the interest would be calculated as follows: I = $880 * 0.0525 * 2 = $92.40. For the account with $675 at 3.5% for 4 years: I = $675 * 0.035 * 4 = $94.50.

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