Simple Interest Calculator
Calculate interest on the original principal only, with no compounding.
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Simple interest is the plainest form of interest: it's calculated only on the original principal, year after year, with no compounding. Unlike compound interest, where each year's interest itself starts earning interest, simple interest pays the exact same dollar amount every period.
It shows up in certain bonds, some short-term loans, and basic interest calculations, and it's also the clearest way to see just how much compounding is worth by comparison. For savings specifically, most real-world accounts quote an APY rather than a simple rate.
How does this calculator work?
Enter the principal, the annual interest rate, and the number of years (rounded to the nearest whole year).
The calculator computes one fixed amount, annual interest = principal × annual rate, and credits that exact same dollar figure at the end of every year in the table, since simple interest by definition never changes once the principal is set.
Total interest after N years is just that annual figure multiplied by N (no compounding step, no recalculating a growing balance), and total value is principal plus that total interest.
The table and chart both walk through the balance year by year so you can see the flat, straight-line growth pattern that distinguishes simple interest from the curved, accelerating growth of compound interest.
For a side-by-side comparison with real dollar examples, see Bankrate's guide or Capital One's explainer.
Worked example
$10,000 at 5% simple interest for 10 years.
- Interest per year
- $500
- Total interest (10 years)
- $5,000
- Total value
- $15,000
How the numbers work
5% of $10,000 is $500, and that exact amount is earned every single year, regardless of how many years have already passed, since simple interest never compounds on itself.
Over 10 years, that's a flat $5,000 in total interest, for a final value of $15,000.
Compare this to the Compound Interest Calculator at the same rate and term: compounding annually would earn noticeably more than $5,000 in interest over 10 years, since each year's interest starts earning its own interest. The gap between simple and compound interest grows larger the longer the money sits.
Simple Interest Calculator glossary
- Simple Interest
- Interest calculated only on the original principal amount, the same dollar amount every period, with no compounding.
- Principal
- The original amount of money the interest rate is applied to.
Simple Interest Calculator FAQs
Where is simple interest actually used?+
Some short-term loans, certain bonds, and basic promissory notes use simple interest. Most savings accounts, CDs, and long-term investments compound instead, since compounding is standard for anything measuring ongoing growth.
See the CD CalculatorWhy does simple interest earn less than compound interest?+
Because compound interest also earns interest on previously accumulated interest, while simple interest only ever applies to the original principal. Over short periods the difference is small, but it grows substantially over longer time horizons.
Is simple interest ever better for a borrower?+
Yes, from a borrower's perspective, simple interest on a loan is generally preferable to compound interest, since it means the interest owed doesn't itself accumulate additional interest over time.
My rate is quoted per month, not per year. What do I enter?+
Multiply the monthly rate by 12 to get an annual rate first (a 1% monthly rate becomes 12% annual), since this calculator's rate field expects an annual figure. Note the years field rounds to a whole number, so for terms under a year, it's simpler to compute directly: principal times rate times the fraction of a year, without using this calculator.