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Simple Interest Calculator

See exactly how simple interest grows versus compound interest — and why compounding wins over time.

Updated July 2026 · Editorial standards

Your loan or savings details

$
%
yrs
Interest earned
$1,500
Total amount
$11,500
Monthly interest
$41.67
Compound earns extra
$115

$10,000 at 5% simple interest for 3 years earns $1,500 — a total of $11,500.Monthly compounding would earn $115 more ($1,615 total). Simple interest is linear; compound interest accelerates over time.

Balance breakdown

By KalkWiseVerified against official sources Updated July 2026

What is the simple interest calculator?

In short

Simple interest on $10,000 at 5% for 3 years earns exactly $1,500 — calculated as $10,000 × 5% × 3. Total: $11,500, or $41.67/month. The same amount invested at 5% with monthly compounding earns $1,614 — $114 more. Simple interest grows linearly; compound interest accelerates.

This simple interest calculator computes interest earned using the formula I = P × r × t and compares the result to monthly compound interest so you can see the difference between the two methods.

How to use this calculator

  1. 1Enter the principal (starting amount).
  2. 2Set the annual interest rate.
  3. 3Enter the time period in years.
  4. 4Read total interest, total amount, and the monthly interest figure.
  5. 5Compare to compound interest to see how much extra compounding earns.

The formula

I=P×r×t
Total=P+I
Interest (I) = Principal (P) × Rate (r) × Time (t). Total = P + I. Monthly interest = I ÷ (t × 12). Unlike compound interest, the rate always applies to the original principal — balances grow in a straight line.
I
— Interest earned over the full period
P
— Principal — starting amount
r
— Annual interest rate as a decimal (e.g., 5% = 0.05)
t
— Time in years

Worked example

The scenario

$5,000 at 4% simple interest for 5 years.

gives

The result

Interest = $5,000 × 0.04 × 5 = $1,000. Total = $6,000. Monthly interest = $16.67. Compound interest at 4% monthly would earn $1,105 — $105 more over the same period.

Common use cases

  • Calculating interest on short-term personal loans
  • Understanding car title loans and payday loans (which use simple interest)
  • Comparing savings accounts that advertise simple vs compound APY
  • Treasury bills and some CDs are quoted using simple interest for short terms

Limitations & assumptions

  • Most savings accounts and mortgages use compound interest — simple interest understates long-term returns.
  • The calculation assumes a constant rate and no additional deposits.
  • Does not account for taxes on interest income.

Frequently asked questions

Simple interest is calculated only on the original principal — not on accumulated interest. Formula: I = P × r × t. On $10,000 at 5% for 3 years, that's $10,000 × 0.05 × 3 = $1,500 in interest. Each year earns exactly $500, regardless of how the balance grows.

Disclaimer: KalkWise calculators are provided for general informational and educational purposes only and do not constitute financial, investment, tax, or legal advice. Results are estimates based on the figures you enter and the assumptions described above. Actual outcomes will vary. Consult a qualified professional before making financial decisions.