Find interest that accrues only on the original principal — no compounding — for loans, bonds or short-term deposits.
Simple interest grows at a constant, linear rate: it's calculated only on the original principal, period after period, never on interest that's already accrued. That makes it easy to predict but slower-growing than compound interest over long periods.
P is the principal, r is the annual interest rate as a decimal, and t is time in years. Multiply the three together to get the interest, then add it back to the principal for the total.
Most everyday loans and savings products use compound interest, but simple interest is still common for short-term promissory notes, some auto loans, certain bonds, and back-of-envelope estimates where compounding effects are negligible over a short period.
Use simple interest when your loan or investment terms explicitly say interest doesn't compound, or for a quick estimate over a short time frame where the compounding difference would be tiny anyway.
Yes — just convert months to years by dividing by 12 first (e.g. 6 months = 0.5 years) before entering the time value.
No. Credit cards almost always compound interest, typically daily, so this calculator will understate what you'd actually owe on a revolving balance.