Simple interest calculator
Calculate interest as principal × rate × time, without compounding.
What the result means
Simple interest is a straight line: the same dollar interest each year. Personal loans advertised as a “flat rate” sometimes use this, which looks cheaper than the equivalent compound/comparison rate.
How it is calculated
I = P × r × t. Total = P + I
- P: Principal.
- r: Annual rate as a decimal.
- t: Time in years.
Interest does not itself earn interest. Doubling the time doubles the interest.
Assumptions
- Estimates only — not tax, legal, credit or financial advice. Check the official source or your contract before relying on a figure.
- Rate applies to the original principal for the whole term.
Worked example
$8,000 at 6% for 3 years
A simple-interest example.
- Interest
- $8,000 × 0.06 × 3 = $1,440
- Total
- $9,440
You repay $1,440 of interest if the rate never compounds and never reduces as you pay down.
Flat rates can hide a higher comparison rate
Australian credit advertising usually highlights a comparison rate for consumer loans. A flat 6% on the original principal can cost more than a 6% reducing-balance loan. Use the loan repayment calculator for amortising loans.
Questions
Do savings accounts use simple interest?
Usually no. Banks typically compound. This tool is for flat-rate examples and teaching the formula.
Related calculators
- Compound interestProject a lump sum — with optional regular deposits — as interest compounds.
- Loan repaymentEstimate repayments and total interest for a personal, car or other amortising loan.
- Credit cardEstimate how long a card balance takes to clear at a fixed monthly payment, and the interest you would pay.
Sources
Moneysmart (ASIC)
Last reviewed 2026-08-19
Money · Last reviewed 2026-08-19
Estimates only. Not tax, legal or financial advice. Check official sources before relying on a figure.
Printed from OzCalc (ozcalc.com). Last reviewed 2026-08-19. Estimates only — not tax, legal or financial advice.