Simple interest calculator
50 thousand
Time unit
Simple interest
$12,000
$50,000 × 8% × 3 years ÷ 100 gives $12,000. The total amount is $62,000.
- Total amount
- $62,000
- Interest per year
- $4,000
- Interest per month
- $333
What this calculator does not account for
- Compounding: banks usually add interest to the balance, which earns more than this.
- Tax on the interest, and any fees or penalties.
How this is calculated
Formula: Simple interest
SI =P × R × T ÷ 100What the symbols mean
- PPrincipal, the amount borrowed or invested.
- RRate of interest per year, in percent.
- TTime in years. Months are divided by 12.
Good to know
- Total amount = P + SI. The same interest is earned in every year, so the growth is a straight line.
- Most bank deposits and loans compound. For those, use the compound interest calculator, the FD calculator or the loan EMI calculator.
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<iframe src="/embed/simple-interest" title="Simple interest" width="100%" height="720" style="border:0;max-width:42rem" loading="lazy"></iframe>Questions
What is the formula for simple interest?
SI = P × R × T ÷ 100. For ₹50,000 at 8% for 3 years, the interest is 50,000 × 8 × 3 ÷ 100 = ₹12,000, and the total is ₹62,000.
What is the difference between simple and compound interest?
Simple interest is charged only on the principal. Compound interest is also charged on interest already added, so it grows faster over long periods.
How do I calculate simple interest for months?
Divide the months by 12 to get years. Six months is 0.5 years, so ₹50,000 at 8% earns ₹2,000.
Where is simple interest used?
Short personal loans, some bonds, and many textbook problems. Most savings accounts and home loans use compounding or a reducing balance.