How to calculate simple interest
I = P × r × t
Worked example. Interest earned: $750.
Example inputs — Principal: $5,000; Annual rate: 5%; Years: 3. Starting values are illustrative.
From George Guju, founder of Calculyn · Educational calculator guidance, not professional advice.
How it works
Simple interest is charged only on the original principal, never on accumulated interest.
Assumptions & limitations
- Fixed rate and on-time payments.
- Excludes origination fees, late fees and penalties unless entered.
Formula and assumptions reviewed October 2026 by the Calculyn team. How we build our calculators
Frequently asked questions
When is simple interest used?
Some auto loans, short-term personal loans, and certificates of deposit use simple interest.