Simple interest calculator
Interest and total amount with the formula I = P × r × t.
Total amount
$5,000.00 at 2% per month for 12 months earns $1,200.00 of simple interest, for a total of $6,200.00.
How this is calculated →- Interest$1,200.00
- Rate for the period24%
How to calculate simple interest
With simple interest, interest is charged only on the original principal: I = P × r × t, where P is the principal, r the rate per period and t the number of periods. The total is A = P + I.
Rate and time must use the same unit. For simple interest, conversion is proportional: 12% a year equals 1% a month.
Example: $1,000 at 2% a month for 5 months earns $100 of interest; the total is $1,100.
Frequently asked questions
Where is simple interest used?
In some short-term loans, late fees and quick estimates. Savings, investments and most loans use compound interest.
How do I convert a monthly rate to annual?
Multiply by 12: 1% a month = 12% a year. Compound interest converts differently.
What is a 360-day year?
A banking convention of 360 days a year and 30 days a month, used to convert daily, monthly and annual rates for simple interest.
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