Simple interest formula
Interest = principal × rate × time. Amount = principal + interest. Rate is the annual percent as a decimal. Time is in years. $8,000 at 6% for 3 years is $1,440 interest and $9,440 total.
Simple interest does not add earned interest back into the balance. Most savings accounts and many credit cards use compound interest instead. Use this page for simple-interest loans, some auto notes, and textbook problems.
Worked example
$5,000 at 6% simple interest for 18 months: interest = 5000 × 0.06 × 1.5 = $450, total $5,450. Compound interest on the same numbers is a little higher because interest earns interest.
Many personal loans quote a simple or precomputed finance charge. Credit cards do not; they compound. This page is the simple formula only.
Common questions
When should I use compound interest instead?
Savings, investments, and most mortgages compound. Open the compound interest calculator for those.
Can I enter months?
Yes. 18 months is 1.5 years.