What is the simple interest formula?

Simple Interest = Principal x Rate x Time, where rate is in decimal form and time is in years. For example, Rs 1,00,000 at 5% for 3 years earns Rs 15,000.

When is simple interest used?

Simple interest is common for short-term loans, auto loans, some consumer loans and savings products like certain fixed deposits and bonds.

Simple Interest Calculator

Enter principal, rate and time — get the interest instantly.

Interest Details

Principal Amount ($)

Interest Rate (%)

Time Period

years

Time Unit

Simple Interest

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Maturity Amount (Principal + Interest)

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Annual Rate

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The simple interest formula

Simple Interest = P × R × T, where P is the principal, R the annual rate, and T the time in years. Interest is always calculated on the original principal — unlike compound interest, it never earns interest on interest.

Simple Interest FAQ

Is simple interest better than compound interest?▶

For borrowing, simple interest is cheaper for the borrower. For earning on savings, compound interest earns more. The choice depends on which side of the equation you are on.

How do I calculate interest for months or days?▶

Months are converted to years by dividing by 12, and days by dividing by 365. This calculator does the conversion automatically when you change the time unit.