Simple Interest Calculator
Calculate simple interest earned or paid on savings or loans. Simple interest is calculated only on the principal amount (or that portion of the principal amount that remains unpaid).
Results
| Principal Amount: | $0.00 |
|---|---|
| Interest Amount: | $0.00 |
| Total Amount: | $0.00 |
| Effective Annual Rate: | 0% |
About Simple Interest Calculator
The Simple Interest Calculator calculates the interest earned or paid on a principal amount over a specific time period at a fixed interest rate. Simple interest is different from compound interest in that interest is not added to the principal for future interest calculations.
Simple Interest Formula
The simple interest formula is:
I = P × r × t
Where:
- I = Interest amount
- P = Principal amount (initial investment or loan amount)
- r = Annual interest rate (in decimal form)
- t = Time period in years
When to Use Simple Interest
Simple interest is commonly used for:
- Short-term loans
- Auto loans
- Some personal loans
- Certificates of Deposit (CDs) with simple interest terms
Simple Interest vs. Compound Interest
Simple interest is calculated only on the original principal amount, while compound interest is calculated on the principal amount plus any accumulated interest. Over time, compound interest can result in significantly higher returns (or costs) compared to simple interest.