Enter principal, annual rate, and time period to calculate the interest earned or owed and the total amount. Supports any time unit — days, weeks, months, quarters, or years.
Know three of the four variables in I = Prt? Select what you want to find, enter the other three, and the calculator solves for the missing one.
See exactly how much more compound interest grows vs simple interest over the same period. The gap widens dramatically over longer timeframes — this is why compound interest is better for savers but worse for borrowers.
| Year | Simple Interest Balance | Compound Interest Balance | Compound Advantage |
|---|
Many loans (auto, student, some personal loans) accrue interest daily on the outstanding balance. Enter your loan details and monthly payment to see how much interest accrues each day, and project your payoff date.
| Month | Opening Balance | Interest Charged | Payment | Principal Paid | Closing Balance |
|---|
Convert between Annual Percentage Rate (APR — simple, stated rate) and Annual Percentage Yield (APY — effective rate after compounding). Simple interest products have APR = APY; compounding products always have APY > APR.
| Compounding Frequency | Periods/Year | APY |
|---|
Simple Interest — Formula, All Four Variables & Real-World Uses
Simple interest is the foundation of financial mathematics. Here's every formula you need, with worked examples and the real-world products that use it.
The Four Simple Interest Formulas
| Solve For | Formula | Example |
|---|---|---|
| Interest (I) | I = P × r × t | $10,000 × 0.06 × 3 = $1,800 |
| Total Amount (A) | A = P × (1 + r × t) | $10,000 × (1 + 0.06×3) = $11,800 |
| Principal (P) | P = I ÷ (r × t) | $1,800 ÷ (0.06 × 3) = $10,000 |
| Rate (r) | r = I ÷ (P × t) | $1,800 ÷ ($10,000 × 3) = 6% |
| Time (t) | t = I ÷ (P × r) | $1,800 ÷ ($10,000 × 0.06) = 3 years |
Time unit conversions: For months: divide by 12. For days (standard): divide by 365. For days (banker's rule): divide by 360. The rate r must always be expressed as a decimal (6% → 0.06).
Real-World Products That Use Simple Interest
Auto loans: Most US car loans accrue simple interest daily on the outstanding balance. Making a payment even one day early reduces the outstanding balance immediately, saving interest.
Federal student loans: US federal student loans accrue simple daily interest (6.39% undergraduate, 2025–26 academic year). Unpaid interest capitalises (is added to principal) at the start of repayment.
US Treasury bills: T-bills use a 360-day banker's rule convention. A $10,000 T-bill at 5.25% for 90 days: I = $10,000 × 0.0525 × (90/360) = $131.25.
Some personal loans and CDs: Short-term instruments often use simple interest for simplicity.
Simple vs Compound Interest — Quick Summary
Simple interest: I grows by the same amount each year (linear). $10,000 at 5% for 30 years → $25,000 total ($15,000 interest).
Compound interest (monthly): $10,000 at 5% for 30 years → $44,677 total ($34,677 interest).
Compound advantage: $19,677 — all from interest earning interest. The longer the period, the wider the gap.