Simple interest and total amount, compared with compound interest.
Quick answer
It earns $900.00 in interest, so the total after 3 years is $5,900.00. Simple interest is charged only on the original amount, so the same $300.00 is added every year.
| Years | Interest earned | Total amount |
|---|---|---|
| 1 | $300.00 | $5,300.00 |
| 2 | $600.00 | $5,600.00 |
| 3 | $900.00 | $5,900.00 |
| 5 | $1,500.00 | $6,500.00 |
| 10 | $3,000.00 | $8,000.00 |
These figures are computed with the same formulas as the Simple Interest Calculator above. Change the inputs in the tool to see your own result. For a full table, see Compound interest table.
The Simple Interest Calculator finds the interest and total amount using I = P × r × t, with the time entered in years, months or days. It shows the formula worked out with your numbers and compares simple interest with monthly compound interest year by year, so you can see how much more compounding earns or costs.
Made for everyone. Typical uses:
Invest 5,000 at 4% simple interest for 3 years: interest = 5,000 × 0.04 × 3 = 600, so the total is 5,600. The same 5,000 at 4% compounded monthly for 3 years grows to 5,636.36, about 36 more.
Simple interest never adds earned interest back into the principal. Most bank accounts, credit cards and long-term loans use compound interest, so use the Compound Interest Calculator for those. Days are converted with a 365-day year.
Accuracy: Formulas follow standard published methods and are checked against worked reference examples. Results are estimates based on the values you enter and do not replace advice from a qualified professional.
Expert Tip
For exams, remember the rate must match the time unit: an annual rate with a time in months needs the months divided by 12.
Simple interest is the easiest interest calculation: I = P × r × t. P is the principal (the amount lent or invested), r is the yearly rate written as a decimal, and t is the time in years. The total amount is P + I. If you invest $5,000 at 4 percent simple interest for three years, the interest is 5,000 × 0.04 × 3 = $600, so you end with $5,600.
The key feature is that the interest is always calculated on the original principal, never on interest already earned. That makes the growth a straight line: the same amount is added every year.
The formula needs time in years. For months, divide by 12; for days, divide by 365. So $2,000 at 8 percent for six months is 2,000 × 0.08 × 0.5 = $80, and $10,000 at 6 percent for 90 days is 10,000 × 0.06 × 90 ÷ 365 = $147.95. The calculator converts for you when you choose months or days, which avoids the most common exam error: mixing an annual rate with a time in months.
Some banks and bonds use a 360-day year (the "banker's year") for certain products, which gives slightly higher interest for the same number of days. If you are matching a specific contract, check which day-count it uses.
The difference shows up over time. $5,000 at 4 percent for three years earns $600 in simple interest, but $636.36 if interest is compounded monthly. Over 10 years, $10,000 at 5 percent earns $5,000 of simple interest, which is $15,000 in total, against $16,288.95 with yearly compounding. Over 30 years the gap is huge: $25,000 with simple interest against $43,219.42 with compounding.
The table in the calculator lists both year by year so you can see where they diverge. If your interest is added to the balance, which is the case for most savings accounts, mortgages and credit cards, use the Compound Interest Calculator instead. The article simple vs compound interest explains how to tell which one applies to your product.
Simple interest is less common than compound interest in everyday finance, but it appears in several important places.
The formula can be rearranged to find any of its parts. To find the rate: r = I ÷ (P × t). To find the time: t = I ÷ (P × r). To find the principal: P = I ÷ (r × t). If a loan of $8,000 earned $960 interest in two years, the yearly rate is 960 ÷ (8,000 × 2) = 6 percent. If you know the interest you want and the rate you can get, the principal you need follows the same way.
Percentages are easy to misplace by a factor of 100. Write 4 percent as 0.04 in the formula, or as 4 and divide by 100 at the end, and be consistent. The Percentage Calculator is handy for checking the arithmetic.
The calculator assumes a constant rate and that no payments are made until the end. A loan repaid in instalments needs the Loan Calculator or the EMI Calculator, because the balance changes. To measure the growth rate of an investment over time, use the CAGR Calculator. Nothing you enter is stored or sent: the maths is done in your browser.
The difference between simple and compound interest with formulas, side-by-side numbers over 3, 10 and 30 years, and how to tell which one your loan or account uses.
What EMI means, the reducing-balance formula, flat versus reducing rates, and practical ways to cut the interest you pay on a home, car or personal loan.
Reference table with CSV download.
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