Finance & Business
Simple Interest Calculator
Interest and total payoff on a principal that doesn't compound — a straight-line calculation year over year.
$
Total interest
$2,400.00
Total amount payable
$12,400.00
Year-by-year balance
| Year | Interest so far | Balance |
|---|---|---|
| 1 | $800.00 | $10,800.00 |
| 2 | $1,600.00 | $11,600.00 |
| 3 | $2,400.00 | $12,400.00 |
Formula
How simple interest is calculated
I = P × R × T
PPrincipal — the original amount lent, borrowed, or invested
RAnnual interest rate, expressed as a decimal
TTime period in years
ITotal interest — added to P for the final amount
FAQ
Common questions
Simple interest is calculated only on the original principal for the entire term, so it grows in a straight line year over year. Compound interest is recalculated on the growing balance (principal plus interest already earned), so it grows faster the longer money sits. Short-term loans, some bonds, and car loans often use simple interest; savings accounts and long-term investments usually compound.