Simple Interest Calculator
Calculate simple interest earned or owed on a principal amount.
Simple Interest Calculator
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How Simple Interest Works
Unlike compound interest, simple interest is calculated only on the original principal, it never earns interest on previously accumulated interest. It's commonly used for short-term loans, certain bonds, and some auto loans.
Formula
Interest = Principal × Rate × Time
Total amount = Principal + Interest
Frequently Asked Questions
How is this different from compound interest?
Simple interest only accrues on the original principal, while compound interest accrues on the principal plus all previously earned interest, resulting in faster growth over time. See our Compound Interest Calculator for that scenario.
What does 'Time' mean in this formula?
The number of years the money is borrowed or invested. Use decimals for partial years, for example 0.5 for six months.
Is my savings account simple or compound interest?
Most savings accounts and investments use compound interest. Simple interest is more common for certain short-term loans and specific financial products, check your account terms to confirm.