Simple Interest — The Complete Basics

Understand Simple Interest with an everyday analogy, the core SI formula and all its rearrangements, a fully worked example, exam shortcuts, and a self-check quiz for SSC-CGL.

By the PadhoDost Team · 📖 6 min read · Updated 4 August 2026

Part of SSC CGL & Banking prep

🧠 Renting your money

Imagine you lend your friend ₹1,000 and, like renting out a bicycle, you charge a small fixed fee for every year he keeps it. That yearly rent on money is called interest. In Simple Interest, the rent is calculated only on the original ₹1,000 every single year — it never changes. That fixed, unchanging rent is the whole idea.

The money you lend or borrow is the Principal (P). The percentage charged per year is the Rate (R), usually 'per annum' meaning per year. The duration is the Time (T). In Simple Interest, the interest for each year stays the same because it is always figured on the original principal, not on the growing total.

The Core Formula

SI = (P x R x T) / 100
Amount (A) = P + SI = P x (1 + (R x T)/100)
To findFormula
Simple InterestSI = P x R x T / 100
PrincipalP = 100 x SI / (R x T)
RateR = 100 x SI / (P x T)
TimeT = 100 x SI / (P x R)
AmountA = P + SI

How to solve any SI problem

  1. 1Write down what you know: P, R, T, or SI/Amount.
  2. 2Make sure R and T use the same time unit (both in years).
  3. 3Put the values into SI = P x R x T / 100.
  4. 4If the question asks for the Amount, add SI to P at the end.

📝 Worked example

Q: Find the Simple Interest and final Amount on ₹8,000 at 5% per annum for 3 years.

Given: P = ₹8,000, R = 5, T = 3.

SI = (8000 x 5 x 3) / 100

SI = 120000 / 100 = ₹1,200

Amount = P + SI = 8000 + 1200 = ₹9,200

Answer: SI = ₹1,200 and Amount = ₹9,200.

⚠️ Watch the units. If the rate is per annum but the time is given in months, convert months to years first (for example, 9 months = 9/12 = 3/4 year). Mixing units is the most common mistake in the exam.
💡 Handy shortcut: at simple interest a sum doubles when SI equals P, so 100 = R x T. For example, money doubles in 8 years means R = 100/8 = 12.5% per annum. To triple, SI must equal 2P, so 200 = R x T.

Remember these

  • ✓Interest is always calculated on the original principal only — it never compounds.
  • ✓SI = P x R x T / 100 is the one formula everything else comes from.
  • ✓The same interest is earned every year, so SI grows in a straight line with time.
  • ✓Amount = Principal + Simple Interest.
  • ✓Keep rate and time in matching units before you calculate.

⚡ Quick check

At what rate of simple interest per annum will ₹2,000 grow to ₹2,500 in 5 years?

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