Last updated: November 19, 2025
Simple interest calculator explained
Simple interest keeps the math linear: interest accrues only on the original principal, not on prior interest. This calculator applies to solve for any missing variable and reports both the interest amount and the total principal plus interest.
How the conversion works
The formula is:
where is principal, is the annual rate (decimal), and is time in years. The total amount owed or earned equals . Rearranging yields , , and .
Units and conversions
| Variable | Units | Notes |
|---|---|---|
| currency | Starting balance. | |
| percent/year | Enter APR as a percentage; the calculator divides by 100. | |
| years | Months convert to fractional years automatically. | |
| currency | Interest earned or paid. | |
| Total | currency | Sum of principal and interest. |
Worked examples
- Earn interest on a certificate
, , years.
Total .
- Solve for principal
Earn $2,000 in simple interest at 4\% over 5 years.
Tips and pitfalls
- Simple interest applies to many short-term notes and Treasury bills; long-term loans usually use compounding.
- Ensure uses consistent units; enter months when holding periods are shorter than a year.
- Because interest does not compound, effective annual rate equals the nominal rate; use the compound interest calculator for savings accounts.
- When comparing loan offers, convert any discount points or origination fees into the effective rate before plugging numbers in.