InterestMath

Simple Interest Calculator

Calculate simple interest (not compounded). Compare simple vs compound interest side by side.

Simple Interest Inputs
$
%
Simple Interest

Total Interest Earned

$2,500

Final Amount

$12,500

Formula: I = P × r × t

I = $10,000 × 0.0500 × 5 = $2,500

Compound Interest

Total Interest Earned

$2,762.82

Final Amount

$12,762.82

Formula: A = P(1 + r)t

A = $10,000(1 + 0.0500)5 = $12,762.82

Compound Interest Advantage

+$262.82

more earned with compound interest over 5 years

Simple vs Compound Interest Over Time

The straight blue line shows simple interest (linear growth). The green curve shows compound interest (exponential growth). The gap widens over time.

How Simple Interest Works

Simple interest is the most straightforward way to calculate interest on a principal amount. Unlike compound interest, simple interest is calculated only on the original principal — it does not factor in previously earned interest.

The Formulas

Simple Interest: I = P × r × t

Total Amount: A = P + I = P(1 + r × t)

  • P = Principal (starting amount)
  • r = Annual interest rate (as a decimal)
  • t = Time in years

Why the Difference Matters

With simple interest, you earn the same dollar amount of interest each year. With compound interest, each year's interest is added to the principal, so you earn interest on your interest. Over short periods, the difference is small, but over decades it becomes substantial — this is the power of compounding.

Frequently Asked Questions

This calculator is for educational purposes only and does not constitute financial advice. Consult a qualified financial advisor for personalized guidance.