Simple Interest—See I = P×R×T + Compound Side-by-Side

3 inputs · simple total + annual compound comparison · free

Compound row uses annual compounding: A = P(1 + R)T.

Simple interest (I)

—

Simple: total (P + I)

—

Compound: total (annual)

—

Compound interest earned

—

Installments: interest calculator · loan · car · mortgage

Education & planning only. Home · Personal · Business

Interest Calculator

Loan Calculator

Personal Loan Calculator

Mortgage Calculator

What simple interest means

Simple interest is calculated only on the original principal. It never earns “interest on interest.” The classic formula is:

I = P × R × T

P is principal, R is the annual rate written as a decimal (5% → 0.05), and T is time in years. The balance after T years is P + I if nothing is repaid along the way.

How compound differs on this page

We show annual compounding: A = P(1 + R)T. Interest stays in the pot, so the ending balance beats simple interest at the same nominal rate.

Bank loans are often amortized—a third pattern. For monthly payments use interest or loan; unsecured: personal; housing: mortgage.

When simple interest shows up in real life

You might see simple interest in textbooks, some short-term notes, or simplified examples. Savings products often quote APY, which already reflects compounding. Your contract—not the name of the product—tells you which math applies.

Frequently asked questions

Is simple interest better when I borrow?
Often you pay less total interest with simple interest than with compounding on the same principal, rate, and years—because nothing stacks on old interest. What matters is what your promissory note actually says.
Why is the compound total higher here?
Annual compounding reinvests each year’s interest. Simple interest leaves the interest separate and does not grow the base for next year’s calculation.
Can I use months instead of years?
Yes. Express time as a fraction of a year (9 months = 0.75) or use I = P × R × (months ÷ 12).
What if the rate changes mid-way?
This tool assumes one constant rate for the whole period. Changing rates need separate steps or a different model.
Does this replace my loan statement?
No. It is for learning and quick estimates. Lenders round and may use different conventions.