Enter the principal, annual rate, and time period — simple interest only accrues on the original principal, using I = P × r × t.
Simple interest is interest calculated only on the original principal amount, for the entire time period. Unlike compound interest, which also earns interest on previously-earned interest, simple interest grows in a straight line rather than accelerating — so it's easier to calculate by hand, and generally results in less total interest over long periods than an equivalent compound rate.
Simple interest only accrues on the original principal. Compound interest also accrues on interest that's already been earned, so the balance grows faster the longer it compounds. Simple interest is common for short-term loans, some bonds, and certain legal or contractual contexts where a straightforward, predictable interest calculation is preferred. For the compounding version of this math, see the Compound Interest Calculator.
The formula is I = P × r × t, where I is the interest earned, P is the principal, r is the annual interest rate expressed as a decimal, and t is the time in years. The total amount is simply Principal + Interest, since simple interest never gets added back into the base that earns further interest.
Some auto loans, short-term personal loans, and certain promissory notes use simple interest. Most everyday consumer banking products — savings accounts, CDs, and mortgages — compound instead, so simple interest is more the exception than the rule; always check the specific terms of your loan or investment to know which method applies.
Worked example: $5,000 at 5% for 3 years: interest = 5,000 × 0.05 × 3 = $750, for a total amount of $5,750.