10,000 at 6% for 3 years
- Principal
- 10,000
- Interest rate (per year)
- 6%
- Time
- 3
- Time in
- Years
- Interest
- 1,800.00
- Total amount
- 11,800.00
- Amount if compounded yearly
- 11,910.16
Checked against: 10000 × 0.06 × 3 by hand; 10000 × 1.06³ = 11910.16
Simple interest calculator
Calculate simple interest (I = P × r × t) and the maturity amount on a principal for a term in years, months or days.
By AdminDrafted with AI writing toolsUpdated Checked examples: 5
Interest
$
Interest: $1,800.00
- Total amount
- $11,800.00
- Interest per year
- $600.00
- Amount if compounded yearly
- $11,910.16
At 6% simple interest, $10,000.00 earns $600.00 a year, so $1,800.00 over the term. Compounding yearly at the same rate would give $110.16 more.
Amount at maturity
Principal84.7%Interest15.3%
Balance over time
Simple interestCompounded yearly
Interest by year
| Period | Interest in period | Interest so far | Balance |
|---|---|---|---|
| Year 1 | $600.00 | $600.00 | $10,600.00 |
| Year 2 | $600.00 | $1,200.00 | $11,200.00 |
| Year 3 | $600.00 | $1,800.00 | $11,800.00 |
How it's calculated S
Time in years
Interest
Total amount
Rounded half-to-even to 2 decimals for display only.
About the simple interest calculator
Simple interest is paid only on the original principal: I = P × r × t, where r is the yearly rate as a decimal and t the time in years. A term in months is divided by 12, and a term in days by 365 (actual/365) or by 360, the banker's year some lenders and money markets use. The amount due at maturity is A = P(1 + rt).
With the defaults, 10,000 at 6% for 3 years earns 600 a year and 1,800 in total, for a maturity amount of 11,800. Compounded yearly at the same rate, the same deposit would reach 11,910.16, which is 110.16 more.
Interest here never earns interest of its own. Savings accounts and most deposits compound, so use the compound interest calculator for them; simple interest suits short loans, flat-rate quotes and interest accrued between coupon dates.
Simple interest formula
Simple interest is I = P × r × t (OpenStax, Prealgebra 2e): principal times the yearly rate as a decimal times the time in years, and the total with interest is A = P(1 + rt). For example, 10,000 at 6% for 3 years earns 10,000 × 0.06 × 3 = 1,800, for a total of 11,800. It applies when interest is charged only on the original principal.
How to calculate simple interest step by step
- Write the rate as a decimal: 6% = 0.06.
- Put the time in years: 3 years, or 9 months = 9 ÷ 12 = 0.75 years.
- Multiply: I = 10,000 × 0.06 × 3 = 1,800.
- Add the principal for the total: A = 10,000 + 1,800 = 11,800.
Each year earns the same 600, because the interest is always charged on the original 10,000. That straight-line growth is what separates simple interest from compound interest.
Finding the rate, time or principal
- Rate: r = I ÷ (P × t). Earning 1,800 on 10,000 over 3 years means r = 1,800 ÷ 30,000 = 0.06, or 6% a year.
- Time: t = I ÷ (P × r). Earning 3,000 on 10,000 at 6% takes 3,000 ÷ 600 = 5 years.
- Principal: P = A ÷ (1 + rt). To have 11,800 after 3 years at 6%, you need 11,800 ÷ 1.18 = 10,000.
Simple interest for months and days
For a term in months, divide by 12: 5,000 at 8% for 9 months earns 5,000 × 0.08 × 9/12 = 300.
For a term in days, divide by the day count the contract uses. On 20,000 at 7.5% for 90 days, actual/365 gives 20,000 × 0.075 × 90/365 = 369.86. The 360-day banker's year, used by some lenders and money markets, gives 375.00.
The 360-day basis pays 365/360 times as much for the same days, so check which one applies. Excel's ACCRINTM function calls them basis 3 (actual/365) and basis 2 (actual/360).
Simple interest chart
| Principal | Annual rate | Term / basis | Interest | Total amount |
|---|---|---|---|---|
| 10000 | 6% | 3 years | 1800.00 | 11800.00 |
| 5000 | 8% | 9 months | 300.00 | 5300.00 |
| 20000 | 7.5% | 90 days / 365 | 369.86 | 20369.86 |
| 20000 | 7.5% | 90 days / 360 | 375.00 | 20375.00 |
| 1000 | 0% | 5 years | 0.00 | 1000.00 |
| 0 | 6% | 1 years | 0.00 | 0.00 |
| 10000 | 6% | 20 years | 12000.00 | 22000.00 |
| 10000 | 6.5% | 6 months | 325.00 | 10325.00 |
| 1200 | 10% | 1 days / 360 | 0.33 | 1200.33 |
Interest is the earnings alone; the total adds back the principal. Amounts are rounded to cents.
Simple vs compound interest formula
Compound interest also earns interest on interest already added. Compounded once a year, the total is A = P(1 + r)^t; compounded n times a year, A = P(1 + r/n)^(nt). Compound interest is then A − P.
On 10,000 at 6% for 3 years, simple interest gives 11,800, yearly compounding 11,910.16 and monthly compounding 11,966.81. Over 20 years the gap widens: 22,000 with simple interest against 32,071.35 compounded yearly.
Savings accounts and most deposits compound, so use the compound interest calculator for them. Simple interest suits short loans, flat-rate quotes and interest accrued between bond coupon dates.
Flat-rate loans vs reducing-balance loans
A flat-rate loan charges simple interest on the original principal for the whole term. Borrow 10,000 at 6% flat over 3 years and you pay 1,800 of interest, in 36 installments of 327.78.
An amortizing loan at 6% charges interest only on the balance still owed, so it costs 304.22 a month and 951.90 of interest. The 6% flat rate costs the same as about 11.08% on a reducing balance.
Convert a flat rate before comparing it with an APR or a reducing-balance quote. The loan EMI calculator works out reducing-balance installments.
Common simple interest mistakes
- Using the percentage as a whole number. 6% is 0.06 in the formula; using 6 makes the interest 100 times too large.
- Treating months as years. Nine months is 0.75 years; using 9 makes the answer 12 times too large.
- Mixing day counts. The same 90 days give 369.86 on actual/365 and 375.00 on actual/360.
- Reading the total as interest. In the first example, 11,800 includes the 10,000 principal; the interest is 1,800.
To solve for the rate, time or amount of a lump sum at any compounding frequency, use the time value of money calculator.
Worked examples
5,000 at 8% for 9 months
- Principal
- 5000
- Interest rate (per year)
- 8%
- Time
- 9
- Time in
- Months
- Interest
- 300.00
- Total amount
- 5,300.00
Checked against: 5000 × 0.08 × 9/12 by hand
20,000 at 7.5% for 90 days, actual/365
- Principal
- 20,000
- Interest rate (per year)
- 7.5%
- Time
- 90
- Time in
- Days
- Days in a year
- 365 (actual/365)
- Interest
- 369.86
Checked against: 20000 × 0.075 × 90/365 = 369.8630…
Same loan on a 360-day year
- Principal
- 20,000
- Interest rate (per year)
- 7.5%
- Time
- 90
- Time in
- Days
- Days in a year
- 360 (banker's year)
- Interest
- 375.00
Checked against: 20000 × 0.075 × 90/360 by hand
Questions
How do you calculate simple interest?
Multiply the principal by the yearly rate and by the time in years: I = P × r × t. 10,000 at 6% for 3 years earns 10,000 × 0.06 × 3 = 1,800, so 11,800 is repaid. For a term in months, divide by 12 first: 5,000 at 8% for 9 months earns 5,000 × 0.08 × 9/12 = 300.
How do you calculate simple interest for a number of days?
Divide the days by the day-count basis before multiplying. 20,000 at 7.5% for 90 days earns 20,000 × 0.075 × 90/365 = 369.86 on an actual/365 basis, and 375.00 on a 360-day banker's year. Excel's ACCRINTM function uses basis 3 for actual/365 and basis 2 for actual/360.
How do you find the rate or the time from simple interest?
Rearrange I = P × r × t. The rate is r = I ÷ (P × t): earning 1,800 on 10,000 over 3 years means 1,800 ÷ 30,000 = 6% a year. The time is t = I ÷ (P × r): earning 3,000 on 10,000 at 6% takes 3,000 ÷ 600 = 5 years.
Is simple interest better than compound interest?
For a borrower, yes; for a saver, no. Simple interest grows in a straight line, while compound interest also earns interest on interest. On 10,000 at 6%, the gap is only 110.16 after 3 years (1,800 against 1,910.16), but after 20 years simple interest totals 12,000 while yearly compounding adds 22,071.35.
About this calculator
Sources
- OpenStax Prealgebra 2e — Simple Interest Applications (I = Prt)
- Brealey, Myers & Allen — Principles of Corporate Finance, ch. 2 (simple vs compound interest)
- Microsoft Excel ACCRINTM function (simple interest accrued to maturity, basis 2 = actual/360, 3 = actual/365)
For planning only. Lenders, tax authorities and markets apply their own rounding, fees and rules; confirm figures with them before you commit.
Checked against references
This calculator includes 5 worked examples with independently sourced answers. They run in the test suite, and you can run them here too.