Simple interest is the most basic way interest is charged: a flat percentage of the original principal, every period, with no interest on interest. The formula is I = P·r·t/100, and the final amount is A = P + I. Because it always uses the starting principal, the interest each year is the same fixed amount, which makes simple interest grow in a straight line — slower than compound interest, which snowballs. It's the model behind many flat-rate loans, short-term deposits and finance coursework.
Reviewed: June 20, 2026 · Author: Naveen P N, Founder — AI Calculator · Verified against: the simple-interest relation I = Prt. Not financial advice.
The simple interest equations
Multiply the principal by the rate (as a percent) and the time (in years), then divide by 100 for the interest. Add it to the principal for the final amount. Because the interest is a fixed fraction of the unchanging principal, each year contributes the same Pr/100 — so the total interest is just that yearly amount times the number of years. To find any single unknown, leave it blank and supply the other three; the calculator rearranges the formula for you.
Worked example — a 3-year deposit
Scenario: You deposit 1000 at a simple annual rate of 5% for 3 years.
You earn 150 in interest — exactly 50 each year — for a final amount of 1150. Over 1 year it would be 50 (total 1050), and over 5 years 250 (total 1250): the interest grows in a straight line. Compound interest on the same deposit would earn slightly more (about 158 over 3 years), and the gap widens sharply over longer periods because compounding earns interest on the interest, while simple interest never does.
Frequently Asked Questions
I = P·r·t/100. 1000 at 5% for 3 yr = 150; final amount A = P + I = 1150.
Simple = flat, on the original principal. Compound = on principal + accrued interest, grows faster.
r = 100·I/(P·t). 150 on 1000 over 3 yr → 5% per year.
Convert to years: 6 months = 0.5, 90 days ≈ 0.247 (÷365). Keep the rate annual.
A = P + I = P·(1 + r·t/100). 1000 at 5% over 3 yr → 1150.