Simple Interest Calculator

Calculate interest on loans, investments, and savings accounts using the simple interest formula.

About Simple Interest

Simple interest is a quick method of calculating the interest charge on a loan or investment. It's based on the principal amount, the interest rate, and the time period involved.

How Simple Interest Works

Simple interest is calculated using the formula:

Interest = Principal × Rate × Time

Where:

  • Principal is the initial amount of money
  • Rate is the interest rate per year, expressed as a decimal or percentage
  • Time is the time period, typically expressed in years

Applications of Simple Interest

  • Short-term loans - Many short-term loans use simple interest
  • Bonds - Some bonds pay interest based on simple interest calculations
  • Fixed deposits - Certain types of fixed deposits use simple interest
  • Consumer loans - Some consumer loans like car loans may use simple interest

Simple vs. Compound Interest

Unlike compound interest, which calculates interest on both the principal amount and previously accumulated interest, simple interest only calculates interest on the principal. This means the interest amount remains constant over time with simple interest.

Example

If you deposit $1,000 at a 5% simple interest rate for 3 years:

  • Interest = $1,000 × 0.05 × 3 = $150
  • Total amount after 3 years = $1,000 + $150 = $1,150

With compound interest, the total would be higher since interest would be earned on interest.

Related Calculators

Explore more tools from the same category

Currency Appreciation/Depreciation Calculator

Free online calculator tool for quick and accurate calculations

Use Calculator

Debt to Income Ratio Calculator

Free online calculator tool for quick and accurate calculations

Use Calculator

Rent vs Buy Calculator

Free online calculator tool for quick and accurate calculations

Use Calculator

Did this tool help you? ❤️

Support us by sharing it!