Simple Interest Calculator
Simple Interest Calculator
Simple interest grows linearly: interest is calculated only on the original principal amount, every period, with no compounding on previously earned interest. This is the simplest interest model and the basis for some personal loans, short-term notes, and bonds.
Borrowers and lenders use simple interest for short-term or fixed-principal arrangements where compounding isn't applied, and it's a useful baseline to compare against compound interest to see how much difference compounding makes over the same period.
- Classic Formula: Interest = Principal × Rate × Time — no compounding, interest stays constant each period.
- Linear Growth: Unlike compound interest, the total grows in a straight line rather than accelerating over time.
- Common Uses: Short-term loans, car loans (in some cases), and certain bonds use simple interest instead of compound.
What's the difference between simple and compound interest?
Simple interest is calculated only on the principal; compound interest is calculated on the principal plus any interest already earned, so it grows faster over time. Use our Compound Interest Calculator to compare.
Is my savings account simple or compound interest?
Most savings accounts and investments use compound interest. Simple interest is more common in specific loan agreements — check your loan or account terms to confirm.
Simple Interest Calculator
Simple interest grows linearly: interest is calculated only on the original principal amount, every period, with no compounding on previously earned interest. This is the simplest interest model and the basis for some personal loans, short-term notes, and bonds.
Borrowers and lenders use simple interest for short-term or fixed-principal arrangements where compounding isn't applied, and it's a useful baseline to compare against compound interest to see how much difference compounding makes over the same period.
- Classic Formula: Interest = Principal × Rate × Time — no compounding, interest stays constant each period.
- Linear Growth: Unlike compound interest, the total grows in a straight line rather than accelerating over time.
- Common Uses: Short-term loans, car loans (in some cases), and certain bonds use simple interest instead of compound.
What's the difference between simple and compound interest?
Simple interest is calculated only on the principal; compound interest is calculated on the principal plus any interest already earned, so it grows faster over time. Use our Compound Interest Calculator to compare.
Is my savings account simple or compound interest?
Most savings accounts and investments use compound interest. Simple interest is more common in specific loan agreements — check your loan or account terms to confirm.