Simple Interest Calculator
Simple interest equals principal x annual rate x years, and it is not compounded.
Worked example
| Principal amount | $10,000 |
|---|---|
| Annual interest rate | 5% |
| Number of years | 3 |
| Future Value | $11,500 |
| Principal Amount | $10,000 |
| Total Interest Earned | $1,500 |
How it is calculated
Total interest = principal x (annual rate / 100) x years. Future value = principal + total interest.
Because interest is never added back to the principal, growth is linear, unlike compound interest.
Assumptions and limits
- Assumes a constant rate for the whole term and no additional deposits.
- Many bank products compound; use the compound interest calculator for those.
Educational estimate only; not financial, tax, legal or investment advice.
FAQ
How is simple interest calculated?
Multiply principal by the annual rate and by the number of years. For $10,000 at 5% for 3 years, the interest is $1,500.
What is the difference between simple and compound interest?
Simple interest is earned only on the original principal. Compound interest is earned on the principal plus previously earned interest.
What is the final amount in the example?
Principal plus interest: $11,500.