Enter a principal, interest rate, and time period to calculate simple (non-compounding) interest.
Total interest
$750.00
Final amount (principal + interest)
$5,750.00
| Year | Interest this year | Balance |
|---|---|---|
| 1 | $250 | $5,250 |
| 2 | $250 | $5,500 |
| 3 | $250 | $5,750 |
Interest = Principal × Rate × Time
Unlike compound interest, the rate is always applied to the same original principal — never to previously earned interest — so growth is linear rather than accelerating.
Suppose you have a $5,000 principal at 5% simple annual interest for 3 years:
Simple interest is always calculated on the original principal only, so it grows in a straight line. Compound interest is calculated on the principal plus any interest already earned, so it grows faster over time. Most savings accounts and investments use compound interest; simple interest shows up in some loans and short-term financial instruments.
Some auto loans, short-term personal loans, and certain bonds or promissory notes use simple interest. It's also commonly used in introductory finance education because the math is easier to follow before moving on to compounding.
Because simple interest is only ever calculated on the original principal, the same dollar amount of interest accrues every single year — unlike compound interest, where each year's interest is calculated on a growing balance.
Not financial advice. This calculator is provided for general educational and informational purposes only and does not constitute financial, investment, tax, or legal advice. Results are estimates based on the assumptions you enter and may not reflect actual returns, fees, or taxes. Consult a qualified financial professional before making decisions based on this information.